Reference no: EM131957941

What is wrong with this statement or how would you elaborate on the statement? A decision that would be affected by information on an organizations financial statement would be the ability to get financed. When a business would like to expand, extra funding and financing is sometimes needed. The lender will want to take a look at the organizations financial statement before making the decision to lend the funds. If the financial statement is not in the best shape, then it can negatively affect the financial institutions, such as a bank, decision to loan the money. The better the financial statement is, the easier financing will come. If a firms ROE is low and management wants to it, debt can helps the companies return on equity. But it can come with risk. Debt increases a firms leverage. When the business is booming, the increased leverage results in exponential profit returns. But should the economy go into a recession, the extra debt could cause the firm to fail. Many different business have their business verses not so busy seasons. In a state like Ohio, most people are not going to be purchasing swimming pools during the winter months. With a business that would do most of their sales in the warmer months, it would be better to do a yearly analysis and come up with an average instead of seeing how good the business is doing in August then looking again in November and thinking the business is failing.