Week 3 I Just Found Out 3 Of My Classmates Took My Advice And

Week 3 Assignment: Ratio AnalysisChristina ForresterACC/561March 14, 2018Week 3 Assignment: Ratio AnalysisWhereas financial statements provide the results of a borrowing entity, proper ratio analysis is the process that explains the results to the party required to make decisions based on the financial statement. Financial ratios combine financial numbers to create a context that helps analyse lending decisions.Why the financial statements should be auditedI would want the financial statements to be audited because an audit enhances the degree of confidence the intended user can place on the financial statements. The auditor has the expertise to obtain reasonable assurance that the financial statements are free from material misstatements, errors or fraud. This assurance is obtained through observations, testing, comparison and judgement. An auditor’s opinion on whether the financial statements are prepared following proper financial reporting frameworks (Atrill &McLaney, 2013). Therefore, it would be a gamble for a user to make decisions based on financial statements that are not audited.Implications of the Ratios to the Lending DecisionThe ratios provided are relevant to the lending decision because they inform on the maximum amount P. Jason Corporation can expect