Sfac the Objectives of Financial Term Paper

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This can for example relate to customer relations and service. When a company is well-known for its excellence of customer service, customers tend to return. This is also a very good vehicle of word-of-mouth advertising. Satisfied customers tend to return and to advertise to their friends.

4) Tangible resources are vital to recognize within accounting reports, as this is the indicator of a companies earnings and expenditures. If a company is not well informed of both, it is in danger of making unsound financial decisions.

Intangible resources are important for utilization in paradigms such as advertising and ensuring customer returns and also the cumulative effect of word-of-mouth advertising. While not measurable in terms of income, elements such as customer service are also vital to a company's well-being. Complaints about a company could do much more harm than the best reports on its tangible resources. Reputation is therefore also of vital importance, even if it is not measurable and cannot be included in financial reporting.

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Tangible assets are important to earnings, as this is the primary source of income for the company. Accounting reports should ensure that a company's expenditure is significantly lower than its income. If this is not the case, the company is soon to face financial difficulty.

Intangible assets are however just as important, as this relates to earnings quality. A company with a sound tangible assets report but with defective or non-existing intangible assets may show a profit for a time, but will soon fail. The reason for this is that any company operates within a human environment. This environment requires the intangible to make a success of tangible asset distribution. Hence it is important for a company to both have a popular product, but also sales people who know how to work with customers and sell….....

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