Management perspective, Financial decision and Corporate Valuations

Jablonsky & Basrsky in 2001 supposed that managerial comprehension of business financial information necessitates the fact that the financial statements should be viewed along the concepts of business economics. As such, managerial analysis of financial statements starts with the basic economic concepts that: 1) the balance sheet configures the financial link connecting the assets to liabilities. Consistently, in an operational business company, the assets are under the company’s management control and management responsibility. This control and responsibility on assets extends to the settlement of liabilities, which are debts to creditors, and return of investment to owners as shareholders’ equity; 2) the net income, which is the difference between assets and liabilities, is actually earned by management within the period. In other words, earning the net income for equity holders, as well as holders of equity preference for accelerating returns are management tasks; and 3) whatever is projected on the income statement in relation to the balance sheet in a business financial statement, exudes business managerial skills at the task of earning a return for the equity holders (Jablonsky & Basrsky, 2001).