The article being reviewed was a research study on the essential role of a financial statement in a company’s profitability. The hypothesis used in Ahmed’s (2018) scholarly research article is that analysis of financial statements influences an organization’s profitability. The report analyzes the financial ratios of Kirkuk Company as a case study to test the hypothesis.
How the Hypothesis Helps in Making Better Business Decisions
The hypothesis of an article is an essential part of the research. The hypothesis is the expected result of a relationship between variables in a study (Binoy, 2019). Subsequently, Ahmed (2018) argues that a business requires prioritizing the analysis of business financial statements for profitability and improved business. Financial statements represent an organization’s financial status and performance, comprising income statements, cash flow statements, and balance sheets (Kahn & Baum, 2020). The financial information helps to identify good performances in an organization that can be taken advantage of and conversely discover weaknesses that inform action to adjust. As a result, decision-making is informed on what adjustments to make for profitability and improved business activity. Additionally, investors and lenders require the financial statements to ascertain their investments are profitable and have minimal liabilities (Alamry, 2020). Consequently, business management is more efficient when financial statements are analyzed and reported.
How to Integrate the Information in an Organization
An organization requires a systematic and gradual change to adapt to growing economies in the diverse economic environment. Strategically, financial statements can be integrated into the organization’s business management by establishing a policy mandating the preparation and reporting of departmental monthly financial statements. The reporting of financial statements is anticipated to increase internal transparency and accountability. In addition, a relevant team of qualified analysts will be hired to analyze the reports to interpret the financial statements to make informed decisions in business management.
References
Ahmed, A. M. (2018). The impact of financial statement analysis on the profitability assessment (applied study of Kirkuk company for producing constructional materials). Studies and scientific researches. economics edition, 28. Web.
Alamry, S. C. M. M. (2020, January 4). Analysis of financial statements. ResearchGate. Web.
Binoy, S. (2019). Significance of Hypothesis in Research. Indian Journal of Holistic Nursing, 10(01), 31–33. Web.
Kahn, M. J., & Baum, N. (2020). Basic accounting and interpretation of financial statements. SpringerLink. Web.