Briefly discuss why firms issue financial statements, considering any one category of user interested in these statements.

Published by

Nov 8, 2022


Struggling with a similar assignment? Don’t know where to start? Don’t have time to work on this? Get a high-quality paper written for you from scratch – PLAGIARISM FREE, guaranteed to get you a good grade. To get started, please click on the Submit Your Instructions at the bottom of the page.

In this activity, we link personal and corporate finance to understand why people sometimes behave like corporations, and vice versa. We begin by asking why firms issue financial statements. Firms that sell ownership shares to the public are required by law to issue financial statements (see SEC, “The Laws That Govern the Securities Industry”), but many other firms also publish similar financial information describing income, assets, and liabilities. Individuals are asked to produce some of the same information as they apply for loans and credit. In this Discussion, we think about the mortgage loan application process to better illuminate information gleaned from a firm’s four key financial statements. Similarities exist between documentation requested of an individual applying for a loan and a firm accepting funds from investors. We explore why this may be true to understand the key financial statements.
Module 2: Case Study Transcripts
Jucheng’s Loan Application
You are a loan offer at a community bank. You are working with a client Jucheng, who is referred by Dave. Dave is a friend of Jucheng, and Jucheng is now working with you to secure his first home loan. With acceptance of Jucheng’s offer on a home, he must secure financing.
Jucheng is currently applying for a home loan while Dave applied recently. Differences in Dave and Jucheng’s financial situations distinguish them as loan applicants. Both loan applicants are buying homes of similar value and their income is similar.
Jucheng’s Profile:
Jucheng only recently accepted employment offering stable income, something he has not had in the past. Jucheng finds it harder to show a record of stable income and employment to meet income documentation requirements. Jucheng’s income has historically been irregular. He supplemented his earnings with the sale of imported Asian Medicinal products but revenues from Jucheng’s supplemental income have also been historically irregular. Jucheng manages each of his business enterprises as Sole Proprietorships. Family contributed funding. He also has personal responsibility for business debts, including a business line of credit with balances and payments that are high in relation to his business income. Jucheng’s amount of savings is low.
Dave’s Profile
Dave has had a stable source of income and has not moved between firms for many years. He has low debt in relation to his assets. Investments listed on Dave’s mortgage loan application counterbalanced the liability of the mortgage loan. The origin or his down payment is savings from past earnings, so his financial “claim” to these funds is clear. He had made no major purchases in recent years and had no major changes in his financial situation. Always having stable income, Dave pays his debts on time. His debt to income ratio is low.
From the perspective of the lender, Jucheng’s request for a loan is more problematic than Dave’s because Jucheng is less able to document his income, assets, and liabilities. The bank needs information to prove that a borrower is likely to repay a loan. Investors considering investing in a firm are interested in similar issues.
You are in a trusted position, aiding community members seeking mortgages, but also assuring that interests of savers of this small bank are safeguarded by your due diligence. You work closely with underwritersLinks to an external site. to ensure documentation of consumer credit applications is in place at loan originationLinks to an external site.. You notice Jucheng is new to the process guaranteeing a borrower’s ability for repayment and general financial stability. You are torn between empathy for Jucheng and an ethical regard for your fiduciary duty as an agent for this small bank. As a loan officer you recognize that Jucheng has difficulty documenting claims to his assets, including the origin of his down payment and his income. You wonder how you will explain the disappointing news that Jucheng may not qualify for a mortgage, even though he has enough income to cover payments currently.
Luckily, you are involved in a Financial Management course offering insight into the four key financial statements and measures derived from them used by firms to justify access to obtain capital markets. Using financial ratios derived from these statements as illustrations, you thus explain to Jucheng the reasoning behind documentation of income and earning ability, solvency, assets and debt, savings, and origins of assets that financial statements offer investors.
Case Questions
Initial Post
Speaking as a loan officer, you may use the case of these two borrowers to illustrate the points you make in this discussion.
Briefly discuss why firms issue financial statements, considering any one category of user interested in these statements.
Using any one type of financial ratio as an illustration, explain how financial statements offer a picture of a firm’s ability to serve as a good manager of invested funds.
Discuss any one financial ratio that a financial institution might use to evaluate the the suitability of an applicant for a personal loan (as an example of one ratio, search for the term “debt-to-income ratio”).
Discuss the similarities between a corporate income statement and balance sheet and the documentation required of a mortgage loan applicant.


Need Writing Help? Our writing specialists are here 24/7, every day of the year, ready to support you! Instantly chat with an online tutor below or click here to submit your paper instructions to the writing team.

More than just an assignment.

Explore Now →

Who is this homework service for?

* If you are having a really hard class and want to get through it, then this is for you.

* If you have a medical emergency or someone close to you has a medical emergency and you don’t think you’ll be able to turn your assignment on time, this is definitely a service you could use.

* You can use us if you are having a tough Professor who won’t give you the grades you deserve.

* If you have a tight work schedule and you are getting points deducted for not submitting assignments on time.

* English might not be your first language and you feel like you are being left behind in class because of it.

* If you have a large project coming up and don’t think you have enough time to get it done well, definitely reach out to us.


Super stoked you are checking us out! We would like to help you with your assignment. We just need a few things from you:

* The full assignment instructions as they appear on your school account.

* If a Rubric is present, make sure to attach it.

* Any relevant weekly readings or learning resources.

* Include any special announcements or emails you might have gotten from your Professor regarding your assignment.

* Any templates or additional files required to complete the assignment.

If your assignment is somewhat complex and you need to explain it, please don’t hesitate to reach out to me via live chat. 



Frequently asked questions

How soon can I get my paper done?

It depends with your deadline. If you need your paper completed in 3 hours, we will deliver it in that time. All you need to do is indicate your deadline in our custom order page here. Alternatively, if you are sending us your instructions via email, please be sure to indicate your deadline.

Will it be completely original? I don't want to be caught in a case of Academic Integrity Violation.

We are as paranoid as you are. Maybe even more! And we understand that the greatest sin you can commit in your academic journey is plagiarizing your academic work. To that end, we have made sure that we check and double-check our papers using high quality plagiarism detection tools such as SafeAssign and Turnitin before submitting the paper to you.

Who is my writer? Is he/she a native English Speaker?

All our writers are native English Speakers. That is not to say that ESL writers are not good, we just prefer hiring native writers because we want the very best people working on your paper. This might mean paying a little bit more for your paper as opposed to when you pay a foreign company whose writers are non-native English Speakers.

What if I need revisions? Will your charge additional for this?

Of course not! If you do happen to require a revision on your paper, our team will handle it for you free of charge. Matter of fact, we won’t rest till you are happy with your paper. So, ask for as many revisions as you need, it’s completely FREE!

Will you give me my money back if I don't like my paper?

We have very few instances where we delivered a paper that a client didn’t fall in love with. But if it so happens that you don’t like your paper for any reason whatsoever, we’ll refund your money back no questions asked.

I have more assignments after this, can you help me with those too?

Of course! And what’s even better is that we can reserve a writer permanently to work on your entire class. This comes in handy for projects which build up on each other and where you need just one writer, one writing style.

I got my order information wrong, can I change that?

Yes you can. Just reach out to our support team via email ( or live chat here and they’ll help you change the instructions.

Can I place an order via email instead of going through the order page?

Yes you can. Email Anna at, she’s in charge of our sales team. Alternatively, you can talk to our Live Chat team here and request to speak to Anna.

Trusted by Thousands of Students

Delivering quality assignments since 2007

%d bloggers like this: