Traditional Financial Reporting and its Limitations

Introduction In a more general term, financial statement states the details of an organization, entity and business financial activities. It provides information about the financial performance, position as at a given date, changes in financial position, etc., that are useful for economic decision. Some of the information content may include the statement of an entity’s assets (non-current and current), liabilities (short and long time), ownership structure, and statement of income, expenditure and profits. It may also provide information on investing, operating and financial activities cash flows. Aside from this, it information contents may include set of notes, management discussions and analysis. Notwithstanding, are these information adequate for economic decision making process? Are these inadequacies or limitation address by modern performance measures such as economic value added analysis (EVA), Shareholders value analysis (SVA) and Extensible Business Reporting Language (XBRL )? In view of the foregoing, this paper discusses analysis of financial statements and limitations inherent in traditional financial reporting. It also considers whether modern and contemporary measures of performance address these limitations. Analysis based on financial statements Financial statement analysis is fundamental to the determination and evaluation of an organization profitability and health conditions. It involves the assessment of its past, present and sometimes futureShow MoreRelatedBrief Analysis About Integrated Reporting1128 Words   |  5 Pagesabout Integrated Reporting Introduction Since the IIRC was found in 2010, the settlement of integrated reporting has been considered and confirmed by various committees. 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