Financial Analysis Essay Example | Topics and Well Written Essays - 500 words

Financial Analysis - Essay Example Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) are used by the reporting entities to prepare their financial statements for a common user. These accounting standards provide a general pattern and policies to furnish financial information in such a manner that a person with little financial knowledge can easily grasp the information content presented under those financial statements. If the financial statement of Morson Inc and Kforce Inc are taken into consideration, both of them are formatted in an unconventional pattern. Both of the firms have prepared their financial statements to fulfil the requirements of a particular user group as the financial statements show a pattern which is quite inconsistent with other generalized patterns. If income statements of both the companies are taken into account, then it can be noticed that the conventional â€Å"step-method† is not completely followed. The other major discrepancy that can be observed is that finance cost is shown separately, however, in the conventional format it is displayed after operating results and before the tax expenses. In a generalized pattern, no term like â€Å"equity earning† is used but this term is used in both the financial statements. Overall, the accounting heads under the income statement are displaced for its intended users and do not provide general results. As far as is balance sheets of both the companies are concerned, their accounting heads used in the balance sheets are quite different from that of a generalized balance sheet such that an ordinary balance sheet is split into two categories which are assets and the equity & liabilities. However, the existing balance sheets are not constructed in that manner as they have been categorized into â€Å"operating and financing†. In these balance sheets, net