Question

From the perspective of an investor, determine whether or not you would invest in Amazon based...

From the perspective of an investor, determine whether or not you would invest in Amazon based on the company’s statement of changes in financial position (SCFP). Support your opinion.

Homework Answers

Answer #1

Statement of Changes in Financial Position shows only changes in the stockholders' equity and accumulated OCI.

Investors regularly look for profits of the company. How the profits are earned? Whether the profits are from Non-operating or Operating?

If the profits are from Operating Income, investors would likely favorable in investing in the company.

And investors even analyse the cash flow statements to know the cash fluctuations in the company. Whether the company issue cash dividends or would accumulate the earnings for future prospects.

All these aspects need to be analyzed inorder to invest.

Therefore, only Statement of Changes in Financial Position is not sufficient to be relied upon by the investor.

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