Impact on The Financial Analysis allassignmenthelp.com

Any equity shares issued for inadequate consideration or for non-cash odes can distort the ratios calculated for the financial analysis. The equity and its classes have to be presented in a manner in financial statement as per accounting concepts and conventions. Thus any item of key items of income or expenditure, asset or liability if underestimated or overestimated can have an impact on financial position or performance of the company. The equity and its classes has to be interpreted and recognised in a manner as specified by the accounting standard thus it can be said that it will have an underlying effect on the financial decisions to be made and on the ratios which are plainly calculated for financial purposes. (Deloitte, n.d.)