Table of Contents: Page Number

Executive Summary………………………………………………………

3

Introduction of GSK………………………………………………………

4

Strategic

Priorities……………………………………………………….. 5

SWOT Analysis……………………………………………………………..

8

Ratio Analysis………………………………………………………….…

10

Common Size Analysis…………………………………………………

16

Cash Flow Analysis……………………………………………………..

25

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Financial Highlights of the year

2009……………………………… 28

Future outlook……………………………………………………………

28

Suggestions……………………………………………………………….

29

Objectives of Financial Statements

With the help of financial market

strategies…………………….. 30

Bibliography……………………………………………………………….

31

Executive Summary:

GSK is delivering health to the people all over the world. In Pakistan

GSK sells its products to hospitals, governments and other

institutions as well for the betterment of the people and delivers

health to the general public.

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Financials of the GSK Pakistan are presenting true and fair view of

the company financial performance. In the year 2009 the sales of

the company has increased but due to excessive costs and

expenses the profitability of the organization decreased as

compared to the year 2008. The decreasing trend in GSK is due to

some factors such as inflation, recession, freezing medicine prices.

This decreasing trend caused lower EPS and low comprehensive

income. In the year 2009 the plant and equipment increased,

reserves are used for the expansion of the business. The firm

invested money in investment activities and expanded the business

due to this expansion fewer dividends are paid to the stock holders.

The objective of financial statements is to serve the needs of equity

investors. Measurement of earning power is, however, the common

denominator of all users' needs for accounting information. It is the

responsibility of the management to produce financial statements.

Introduction of GSK:

GlaxoSmithKline Pakistan Limited was created on January 1st 2002

through the merger of SmithKline and French of Pakistan Limited, Beecham

Pakistan (Private) Limited and Glaxo Welcome (Pakistan) Limited- standing today

as the largest pharmaceutical company in Pakistan

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As a leading international pharmaceutical company Galxo make a real

difference to global healthcare and specifically to the developing world..

Companies that respond sensitively and with commitment by changing their

business practices to address such challenges will be the leaders of the future.

GSK Pakistan operates mainly in two industry segments: Pharmaceuticals

(prescription drugs and vaccines) and consumer healthcare.

Glaxo Smith Kline is a world leading research based pharmaceutical

company, engaged in manufacturing and marketing of ethical specialties, other

pharmaceutical, animal health and consumer products. With a powerful

combination of skills and resources, it provides a platform for delivering strong

growth in today’s rapidly changing global health care environment.

Strategic Priorities:

By focusing on business around five strategic priorities, Galxo is confident

that they can fulfill their promises to the world.

Grow a diversified global business:

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Galxo is reducing risk by broadening and balancing their portfolio,

diversifying new product areas, while also fully capturing

opportunities for products across all geographic boundaries.

Deliver more products of value:

Transforming R&D to ensure that they not only deliver the current

pipeline of new pharmaceuticals, vaccines and consumer health

care products, but that they are also to sustain this flow of new

products for years to come.

Simplify the operating model:

Glaxo is simplifying their operating models to ensure that it is fit for

purpose and able to support their business in the most efficient and

effective way.

Create a culture of individual empowerment:

Empowerment is a key to achieving goals and Glaxo ensure that

their employees receive the tools and inspiration they need to make

decisions with confidence and accountability.

Building Trust:

Glaxo sees building trust as a fundamental platform, essentially,

without trust, we don’t have a business.

Best People Best Place Best Work

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“GSK is the best place to work due to its professional and friendly

work environment with equal growth opportunities for every

employee.“

“By empowering individuals and holding them accountable for

delivery of departmental objectives, GSK has built a performance

based culture.”

Competitors of GSK:

There are 500 companies in the pharmaceutical sector of Pakistan from

which main three competitors of GSK are fellows but the productivity of GSK is on the

top:

Abbott Laboratories

Novo Nordisk As

Merck KGAA

Products

It is listed on the Karachi and Lahore stock exchanges. GSK has a large

portfolio of products ranging tablets, toothpaste, inhalers and complex capsules

in over 28000 different pack sizes and presentations. Nine of its products are

amongst the top 15 brands in the country. There are 500 companies in the

pharmaceutical sector of Pakistan. In 2008, the pharmacy market has grown by

11%.

GSK sells its prescription medicines primarily to wholesale drug

distributors, hospitals, government entities and other institutions. These

products are dispensed to the public by pharmacies. GSK leads the local industry

in value, prescription and volume shares and a substantial size difference over

its nearest competitor in the industry. It also exports it good quality products,

which make around 2% of GSK’s sales.

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Leading Products of Glaxo Smith Kline Ltd

Augmentin

Amoxil

Panadol

Ventolin

Ampiclox

Betnovate

Calpol

Zantac

Septran

Top Vaccines of Glaxo Smith Kline Ltd

Engerix

Typherix

Infanrix

Mencevax

Fluarix

Havrix

Varilrix

Hiberix

Tritanrix

Priorix

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SWOT Analysis

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Strengths

The only pharmaceutical company tackling the three WHO priority

diseases: HIV/AIDS, Tuberculosis, Malaria.

Weaknesses

Political instability in the country is the major problems which create hurdles in

the achievement of the objective.

Opportunities

Learning continuously and developing professional potential and ability.

Leaders act as teachers, coaches, and champions of development, creating

career-long learning across the organization.

Threats

Energy crisis, terrorism and 500 pharmaceuticals companies work in

Pakistan.

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Ratio Analysis

Ratio Analysis

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1) Current Ratio (2009) = Current Assets / Current Liability

= 8170027 / 2524426

= 3.2: 1

Current Ratio (2008) = Current Ratio / Current Liability

= 7976061 / 1937662

= 4.1: 1

Interpretation:

The current ratio shows that the liquitidy of the assets in the case of Glaxo

Smith Kline the current ratio are effective, which means that the assets are more

then the liabilities and the liquidity position of the company is strong.

2) Gross Profit Ratio (2009) = (Gross Profit / Sales) * 100

= (3545662 / 14719132) * 100

= 24.1%

Gross Profit Ratio (2008) = (Gross Profit / Sales) * 100

= (3855605 / 13403224) * 100

= 28.8%

Interpretation:

The gross profit ratio of the company tells that the company’s margin

available for its expenses. In case of GSK the gross margin in the previous year is

better than the current year. It is due to the world wide recession but it doesn’t

mean that the company is in loss.

3) Net Profit Ratio (2009) = (Net Profit / Sales) * 100

= (943911 / 14719132) * 100

= 6.4%

Net Profit Ratio (2008) = (Net Profit / Sales) * 100

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= (1943969 / 13403224) * 100

= 14.5%

Interpretation:

The net profit ratio of the company tells that the total profit gained by the

company after all expenses. In case of the GSK the net profit margin decline in

the current year but the GSK expands its sales.

4) Return on Equity (2009) = (EACSH / Equity) * 100

= (943911 / 8104099) * 100

= 11.5%

Return on Equity (2008) = (EACSH / Equity) * 100

= (1943969 / 8354891) * 100

= 23.4%

Interpretation:

The return on equity of any company tells that the company earns its

equity. GSK return on equity proportion decreases as compared to previous year

by 11.9%.

5) Return on Assets (2009) = (EACSH / Total Assets) * 100

= (943911 / 8483428) * 100

= 11.12%

Return on Assets (2008) = (EACSH / Total Assets) * 100

= (1943969 / 5432399) * 100

= 35.00%

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Interpretation:

The return on assets means that the company how much earns against

the utilization of its assets. GSK return on assets decreases by 23.88%.

6) Inventory Turnover (2009) = Cost of Goods Sold / Average Inventory

= 11173470 / 3777947

= 2.95 times

Inventory Turnover (2008) = Cost of Goods Sold / Average Inventory

= 9597619 / 2885614

= 3.3 times

Interpretation:

The inventory turnover tells that how much a company takes time to

complete its one cycle of the product. GSK’s inventory turnover tells that it

completes inventory cycle quite quickly as compared to previous year.

7) Assets Turnover (2009) = Sales / Total Assets

= 14719132 / 8483428

= 1.7: 1

Assets Turnover (2008) = Sales / Total Assets

= 13403224 / 5432399

= 2.4: 1

Interpretation:

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The assets turnover of any company tells that how much the company

earns from the utilization of its assets. GSK assets turnover is lesser than

previous year which is not good for the company.

8) Dividend Payout (2009) = (Dividend Per Share / EPS) * 100

= (5 / 5.5) * 100

= 91.3%

Dividend Payout (2008) = (Dividend per Share / EPS) * 100

= (9.5 / 11.5) * 100

= 82.6%

Interpretation:

The dividend payout of the current year is 91.3%, which is higher than the

previous year. This increment in the dividend payout reflects that the dividend

payout of the company is valuable for the investors or shareholders.

Ratios 2009 2008

Current Ratio 3.2: 1 4.1: 1

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Gross Profit Ratio 24.1% 28.8%

Net Profit Ratio 6.4% 14.5%

Return on Equity 11.5% 23.4%

Return on Assets 11.12% 35.00%

Inventory Turnover 2.95 times 3.3 times

Assets Turnover 1.7: 1 2.4: 1

Dividend Payout 91.3% 82.6%

Conclusion

The net shell we came to know that the ratio analysis is the best tool to

check the performance or working of every company. In case of Glaxo Smith

Kline Pakistan Ltd the ratio analysis, gives the true performance of the company.

GSK has the decreasing trend in all its ratios. It doesn’t mean that the company

is in loss but the give the picture of current year operation. The decreasing trend

in GSK is due to some factors such as inflation, recession, political instability and

Terrorism. GSK face all the challenges and retain its top position in

pharmaceutical industry.

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Common Size Income

Statement and Balance Sheet

Advantages of Common Size Income statement:

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The preparation of Income Statement gives following advantages:

A common size income statement presents a company's revenues and

expenses for a given accounting period in percentages.

The income statement provides information concerning return on

investment, risk, financial flexibility, and operating capabilities and

present it in more understandable form.

The current view of the income statement is that income reflects all items

of profit and loss recognized during the accounting period.

It discloses information about the revenues and expenses that are direct

result of the regular business operations.

Common size statements also can be used to compare the firm to other firms.

Glaxo Smith Kline

Common Size Income Statement

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As on 31-12-2009

Sales

Cost of Goods Sold

Gross Profit

Selling, Marketing & Distribution Expenses

Administrative Expenses

Other Operating Expenses

Other Operating Income

Operating Profit

Financial Charges

Profit Before Taxation

Taxation

Profit After Taxation

Other Comprehensive Income

Far Value Gain / (Loss) on available sale investments

Deferred Tax

Total Comprehensive Income

2009

100.00%

(75.9%)

24.1%

(11.3%)

(4.0%)

(0.94%)

2.9%

10.76%

(0.09%)

10.67%

(4.2%)

6.47%

0.10%

(0.03%)

6.54%

2008

100.0%

(71.33%)

28.76%

(9.91%)

(3.88%)

(1.55%)

9.54%

22.96%

(0.57%)

22.39%

(7.80%)

14.58%

(0.12%)

0.04%

14.50%

Conclusion:

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The common size analysis is very useful analysis to check the

trend with in a firm, according to the above mentioned income

statement of GSK, its very obvious that the Cost of sales has

increased in the year 2009 which caused decrease in gross profit for

the year. Marketing, selling and admin expenses are increased in

the year 2009 which caused decreased operating profit for the year.

Interest in the year 2009 is lowers as compared to the year 2008

which shows the debts are repaid and few debts are taken. Over all

profitability of the firm is decreased in the year 2009 which caused

decreased EPS and less comprehensive income.

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Common Size Balance Sheet

Advantages:

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The preparation of Balance sheet gives following advantages:

It is helpful in ascertaining the financial position of the business by showing

assets and liabilities of the concern on a specific date.

It discloses the solvency of business by showing how much assets are

available for payment of liabilities.

It also discloses the proprietary interest of owner.

It helps in calculation of various ratios which help in better management of

business.

It helps in comparison of assets and liabilities of business on two dates to

ascertain the progress being made by business.

It helps to ascertain the amount of capital employed in business.

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Glaxo Smith Kline

Common Size Balance Sheet

As on 31-12-2009

Assets (%) Liabilities (%)

Non Current Assets  

Property, Equity and Equipment

23.62% Share Capital 15.5%

Long Term Advance 0.55% Reserves 58.11%

Long Term Deposits 0.06% Non Current Liabilities  

Investment 1.53% Staff Gratuity 0.53%

  25.76% Deferred Taxation 2.91%

Current Assets   Current Liabilities

Stores and Spares 1.17% Trade and Other Payables 22.93%

Stock in Trade 36.89%

Trade Debts 9.05%

Loans and Advances 0.82%  

Trade Deposits 0.79%  

Accrued Returns 0.19%  

Refund due from Government 0.14%    

Other Receivables 1.17%  

Taxation – Payment Less Provision

2.29%  

Investments 5.85%  

Cash and Bank Balances 15.79%

Total Assets 100.00 Total Liabilities 100.00

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Glaxo Smith Kline

Common Size Balance Sheet

As on 31-12-2008

Assets (%) Liabilities (%)

Non Current Assets  

Property, Equity and Equipment

22.73% Share Capital 16.06%

Long Term Advance 0.58% Reserves 62.56%

Long Term Deposits 0.06% Non Current Liabilities

Investment 0.01% Staff Gratuity 0.19%

  24.99% Deferred Taxation 2.93%

Current Assets Current Liabilities

Stores and Spares 1.09% Trade and Other Payables 17.57%

Stock in Trade 32.88% Taxation – provision less payments 0.66%

Trade Debts 9.57%

Loans and Advances 1.12%  

Trade Deposits 8.78%  

Accrued Returns 0.75%  

Refund due from Government 0.14%    

Other Receivables 1.44%  

Taxation – Payment Less Provision

-  

Investments 1.46%  

Cash and Bank Balances 25.64%

Total Assets 100.00 Total Liabilities 100.00

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Conclusion:

In the year 2009 reserves are decreased and plant and equipments

are increasing which means the firm used reserve for expansion of

the business and made some capital expenditures for this purpose,

investments are also increased in the year 2009. Trade and other

payables are increased in 2009. Inventory percentage is increased

in 2009 but short term liquidity position poor as compared to year

2009 where as some short term investments are increased in year

2009.

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Cash Flow Statement Analysis

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Glaxo Smith Kline

Cash Flow Statement

As on 31-12-2009

2009 2008

633333

(44827)

(982457)

(7911)

20

(401842)

(475032)

907993

100000

39200

572161

(1698167)

(1527848)

4252745

2724897

CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations 2083606

Staff Gratuity paid (40384)

Taxes Paid (953131)

Decrease / (Increase) in long terms loan employees

(Increase) / decrease in long term deposits

Net Cash from / (used in) operating Activities

CASH FLOWS FROM INVESTING ACTIVITIES

Fixed Capital Expenditure

Proceeds from sale of operating assets

Investments un cashed

Return on Investments – PIBs

Net Cash (used in) / from investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Dividend paid

Net decrease in cash and cash equivalents

Cash and equivalents at the beginning of the year

Cash and equivalents at the end of the year.

367

(239)

1090219

(494178)

53573

175000

24172

(241433)

(1189558)

(340772)

2724897

2384125

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Advantages:

The Statement of Cash Flows is the final document prepared in the

Financial Report set, and provides information that is a direct flow of information

from the Income Statement, Owner Equity Statement and Balance Sheet;

therefore, this report adds validity and accountability to the Financial

Statements.

These statements will be extremely helpful for planning and management

of future financial commitments. Availing Cash Flow financing statements Format

preparation support from us will act as a very useful money management tool

that provides warnings in advance of periods of high expenditure and low sales.

This is also a very important component in the application process for additional

funding.

Helps the companies to know their inflow and outflow of cash and thus

prevent cash shortage

Helps the investors judge whether the company is financially sound

Cash flow statement records the inflow and outflow of cash over a period of

time

We provides Cash Flow statements on monthly, quarterly, six monthly or

yearly bases

Helps the company to know whether it will be able to cover payroll and other

immediate expenses

These statements will be highly helpful for planning and management of

future financial commitments

Conclusion:

A cash flow analysis is a method of checking up on your firm’s financial

health. It is the study of the movement of cash through your business, called a

cash budget, to determine patterns of how you take in and pay out money. The

goal is to maintain sufficient cash for firm operations from month to month. The

above cash flows of GSK shows that the cash inflows are more than the cash out

flows which is good for the GSK as they have sufficient cash to operate business

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and the cash or cash equivalents available in the company are less than the year

2008 but ending balance.

In the year 2009 the firm invested money in investment activities and

expanded the business due to this expansion less dividends are paid to the stock

holders. The cash is generated from operating activities in the year 2009

whereas in the tear 2008 the cash was used in operating activities in this

perspective the cash flow position in the year 2009 for operations are good.

Management Decision and Conclusion:

Financial Highlights of the year 2009:

In the year 2009 the turn over grew by 9.8% and export sales

achieved double digits growth to Rs.390.4 Million. Gross profit in the

year is declined by 4.7% compared by the last year. Margins have

been decreased in the year due to freeze on prices of the majority

products of GSK since 2001 by Govt. Increase in the cost of raw

material and packaging, fuel prices and power and utility cost has

weakened the profitability as prices are being fixed by the Govt. and

company is not allowed to increase the prices of the Medicines.

Administrative expenses increased by 13.2%. GSK has surplus funds

of Rs.2384.1 Million showing a decline of Rs.340.8 Million as against

last year due to divided payments and decreased profitability. The

falling debt ratio shows that the risk to a current or future investor in the

company is decreasing. The company is becoming more financially stable

and in a better position to borrow now and in the future, if the need arises.

Future Outlooks:

The pharmaceutical industry is now facing a very serious challenge to

manage and sustain business operations in a highly inflationary

environment without general price relief. The rising trend in local and

Imported raw and packaging material costs, coupled with the continuous

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weakening of Rupee and domestic inflation have put tremendous pressure

on the profitability of company despite. This is clearly unsustainable for

any business and a general price increase across the board is now vital

and urgently needed for business survival. The company has gained

progress in sales performance by developing new products and

maintained growth of the business. The operating results of GSK

remains under pressure due to vitality in the rupee currency and

inflation. The lack of general increase in prices possesses a greater

risk on future profitability of GSK. Incase of no increase in the

general prices of Medicines will be a negative impact of the industry

and GSK as well.

Management Decision:

Control increasing Cost of sales as in last 6 years the cost

of sales is constantly increasing

Control excessive admin, and marketing costs.

The business can be expanded and can easily afford more

R&D expenses as reserves are sufficient.

Must request Government to take immediate steps to

improve the pricing policy and to allow increase in prices

across the board to support the industry.

Liquidity position is strong but the firm shall invest the

excessive working capital to get maximum outputs.

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Objectives of Financial Statements with

The help of Financial Market Strategies and Development

30 | P a g e

The financial activities of an organizations fall under three

different categories. They are operations, finance, and investment

activities. The financial statement of the organization records and

summarizes the financial transactions and activities in the aforesaid

categories. The income statement, balance sheet, and statement of

cash flows form part of the financial statement. The financial

statement analysis spells out the financial health of an organization

at a given point of time. It is a measure of the financial

responsiveness of the organization with respect to its shareholders

Financial statement information is used by both external and

internal users, including investors, creditors, managers, and

executives. These users must analyze the information in order to

make business decisions, so understanding financial statements is of

great importance. Several methods of performing financial

statement analysis exist

Financial statements show the financial performance of a

company. They are used for both internal-, and external purposes.

When they are used internally, the management and sometimes the

employees use it for their own information. Managers use it to plan

ahead and set goals for upcoming periods. When they use the

financial statements that were published, the management can

compare them with their internally used financial statements. They

can also use their own and other enterprises’ financial statements

for comparison with macro economical data’s and forecasts, as well

31 | P a g e

as to the market and industry in which they operate in. The four

main types are;

Balance sheets

Profit and loss accounts

Cash flow statements

Income statements.

Balance sheets:

Balance sheets provide the observant with a clear picture of

the financial condition of the company as a whole. It lists in detail

the tangible and the intangible goods that the company owns or

owes. These good can be broken further down into three main

categories; the assets, the liabilities and the shareholder’s equity

Assets:

Assets include anything that the company actually owns and

has disposal over. Examples of the assets of a company are its cash,

lands, buildings, and real estates, equipment, machinery, furniture,

patents and trademarks, and money owed by certain individuals

or/and other businesses to the particular company. Assets that are

owed to the company are referred to as accounts-, or notes

receivables.

Current Assets:

Include anything that company cans quickly monetize. Such

current assets include cash, government securities, marketable

securities, accounts receivable, notes receivable, inventories,

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prepaid expenses, and any other item that could be converted into

cash within one year in the normal course of business.

Fixed Assets:

Fixed Assets are long-term investments of the company, such

as land, plant, equipment, machinery, leasehold improvements,

furniture, fixtures, and any other items with an expected useful

business life usually measured in a number of years or decades as

opposed to assets that wear out or are used up in less than one

year. Fixed assets are usually accounted as expensed upon their

purchase. They are normally not for resale and are recorded in the

Balance Sheet at their net cost less accumulated depreciation.

Other Assets:

Other Assets include any intangible assets, such as patents,

copyrights, other intellectual property, royalties, exclusive contracts,

and notes receivable from officers and employees.

Liabilities:

Liabilities are money or goods acquired from individuals,

and/or other corporate entities. Some examples of liabilities would

be loans, sale of property, or services to the company on credit.

Creditors do not receive ownership in the business, only a promise

that their loans will be paid back according to the term agreed upon.

Current Liabilities:

Current Liabilities are accounts-, and notes-, taxes payable to

financial institutions, accrued expenses, current payment of long-

term debts, and other obligations to creditors due within one year.

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Long-Term Liabilities:

Long Term Liabilities are mortgages, intermediate and long-

term loans, equipment loans, and other payment obligation due to a

creditor of the company. Long-term liabilities are due to be paid in

more than one year.

Shareholder’s equity:

The shareholder’s equity is money or other forms of assets

invested into the business by the owner, or owners, to acquire

assets and to start the business. Any net profits that are not paid out

in form of dividends to the owner, or owners, are also added to the

shareholder’s equity. Losses during the operation of the business

are subtracted from the shareholder’s equity.

Assets are calculated the following way:

Assets=Liabilities Net worth

Balance sheets show how the assets, liabilities, and the net

worth of a business are distributed. They usually are prepared at set

periods of time, for example at the end of each quarter. It is always

prepared at the end of fiscal years. The periodic preparation of the

balance sheets, the owner and/or the manager of the company can

see historic-, and current trends and also the general performance

of the corporation. It allows decision makers to make adjustments

when needed, like the proportion of liabilities to assets.

All balance sheets contain the same categories of assets,

liabilities and net worth figures. Assets are arranged in decreasing

order of their liquidity. Liabilities are listed in order of how soon they

must be repaid, followed by retained earnings. The categories and

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formats of Balance Sheets are established by a system known as

Generally Accepted Accounting Principles (GAAP). The system is

applied to all companies, large or small, so anyone reading the

Balance Sheets can readily understand what it is saying.

Profit and Loss Account

Profit and loss accounts summarize the incomes and expenses

of a company in a given period of time. It also includes accruals too,

which are incomes that will be realized only after the particular

Profit and Loss Account statement was prepared.

Cash flow statements

These statements show how money is predicted to move

around at a given period of time. It is useful for planning future

expenses. It shows whether or not there will be enough money to

carry out the planned activities and whether or not the cash coming

in are enough to cover the expenses. The cash flow statement is

useful in the determination of the company’s liquidity in a given

period of time.

Income statements

Income statements measure the company’s sales and

expenses over a specific period of time. They are prepared each

month and fiscal year end. Income statements show the results of

operating during those accounting periods. They are also prepared

using the Generally Accepted Accounting Principles (GAAP) and

contain specific revenue and expense categories regardless of the

nature of the company.

Differentiate between ISA and GAAP?

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The acronym "IAS" stands for International Accounting

Standards. This is a set of accounting standards set by the

International Accounting Standards Committee (IASC). The acronym

"GAAP" stands for Generally Accepted Accounting Principles. The

IASC does not set GAAP, nor does it have any legal authority over

GAAP. The best way to think of GAAP is as a set of rules

that accountants follow.

GAAP are the more generic accounting rules that every country

holds, and are directly influenced by the different accounting

boards of each jurisdiction, whereas, IAS is the specific set of

internationally recognized accounting standards, set by the IAS

Committee.

GAAP, in itself, is locally based, while the IAS is globally

recognized, and some of its rules or standards are incorporated

in the GAAPs of many countries.

In Pakistan most of the public limited companies are required

to keep their financials according to ISA as required by the IAS.

In Short Objectives are:

The Role of Accounting Information in investment valuations

Supplementary information

Conservation

Corporate Earnings forecasts

Fair Value

The Audit Function And the audit certificate

Conclusion:

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The objective of financial statements is to serve the needs of

equity investors. Measurement of earning power is, however, the

common denominator of all users' needs for accounting information.

Although performance of management is the subject of corporate

reports, management must continue to bear responsibility for the

reporting function. If management sets the standards of

measurement, however, the measure may become a rubber

yardstick aimed at suiting the needs of management rather than the

statement user; the accounting profession performs a central role in

setting the standards of measurement.

Bibliography:

Annual Report GSk

http://en.wikipedia.org/wiki/

Financial_statements

Financial markets and corporate strategy By Mark

Grinblatt, Sheridan Titman

http://en.wikipedia.org/wiki/Financial_market

http://www.investopedia.com/ask/answers/05/

iasvsgaap.asp

http://www.snlcenter.com/GAAP/2010/

default.asp

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http://www.answers.com/topic/objectives-of-

financial-statements

http://wiki.answers.com/Q/

What_is_the_objectives_of_financial_statement_

anlysis&src=ansTT

The objective of financial statements: responding to

investors' needs y Arthur Young & Company,

American Institute of Certified Pub

Financial Management  By Carlos Correia, David

Flynn, Enrico Uliana, Michael Wormald

Corporate Financial Statements, A Product of the

Market and Political Processes Ross L. Watts,

Australian Journal of Management, Vol. 2, No. 1, 53-

75 (1977)

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