Question

Briefly explain why performing Business Strategy Analysis first allows us to perform better Accounting Analysis.

Answer 1

Performing the business strategy analysis first allows us to perform better accounting analysis because accounting analysis is representative of the books of accounts of the company and a fair financial statement of the company so financial analysis will be dependent upon accounting analysis to a large extent.

Accounting analysis is the analysis of the books of accounts of the company and they are trying to derive the quantitative informations of the company and they can easily be compared with the performance of the same company over last years or performance of its peers so accounting analysis will be helpful in order to estimate the efficiency and management of the company in an effective manner that will be helping the company in order to maximize the organisation value in accounting analysis will also mean that how the company is trying to incorporate various kind of risks and probabilities which are of futuristic events into the books of accounts and this will also provide us with the method of analysing the approach and attitude of the company in order to manage with the fluctuations of various accounts and it will also provide us with information about integrity of the management of the company about fairness of the books of accounts and they are not trying to to window dress the books of accounts so accounting information will be providing a reflection about the approach of the management and integrity of the management so it will be helping us to find out the overall business strategy of the management because accounting policies are reflective of the nature of the management in the recording of various transactions.

it can often be seen that those companies who have a very high management of books of accounts and they are highly rational and fair towards management of their books of accounts are always having a trust of their investors and they are trying to attract premium valuation in comparison to their industry peers so accounting analysis will be helpful in order to provide a reflection of the business strategies of the various companies.