Question

• Based on your study and analysis of the financial reporting requirements for companies listed on a public stock exchange as outlined in the Sarbanes-Oxley Act (see Student Guide to the Sarbanes-Oxley Act), evaluate the adequacy of the financial reports and disclosures. In your assessment, assume the perspective of at least two different financial stakeholders. Explain how the financial reporting requirements benefit the specific stakeholders and identify any gaps or opportunities to improve the integrity of external financial reporting.

Answer 1

The financial reporting has many benefits in that one of the benefits is to give information about the financial position and potentiality of the company to the investors and user of financial statements.

We know that SOX Sarbanes - Oxley act is introduced to the purpose that the information in financial statements to be correct and honest .

The two perspective of the different stakeholders are as follows.

1. Stakeholders for return of investment for short term period

a. These people try make some profit in very short term i.e in months

b. To satisfy these stakeholders the companies has to try to make a stable position in market and maintain good value for there stock in stock exchanges.

2. Stakeholders for return of investment for long term period

a. These type of stakeholders make investment to make good return for there investments.

b. To satisfy these investors the company should give good dividend returns to them. If possible better to give interim dividends to attract them towards the particular company.

These information should be also includes the detailed explanation about some measures like as follows :-

1.debt equity ratio.

2. Debt coverage ratio.

3. Debt service ratio.

4. Gross profit ratio.

5. Current assets ratio.

Not only the above mentioned ratios all other ratios that are useful to compare with other companies financial statements.

These are all the information for the above given question.

I hope, all the above given information is helpful to you.

Thank you.