This is one of the more common questions we get asked when it comes to financial statements. While it can be a tough question to answer, we at the Greenlight Group think it’s just another piece of financial information that helps the consumer make a more informed decision.
The question is whether and how much money they can spend on the game’s features, like the latest gear or the latest look or the latest weapons; and what that means for the best interests of the customers.
One of the first things we do when preparing our financial statements is conduct a cost of funds analysis. That’s the analysis of how much a company spend to produce a certain product, how much that company sells the product for, and how much the company makes from that sale.
It is a key step in determining the company’s financial health and what it can and cannot spend on. If a company spends too much on a certain feature then the financial statements will show a negative net worth. A positive net worth means the company can buy more stuff, and a negative net worth means the company can’t afford to, and thus the company’s financial health is in jeopardy. This is why it’s important to be careful regarding costs of funds.
The companies financial statements are not only used to assess their financial health but also the company’s ability to pay bills. For instance, if a company has a large amount of debt, then the company’s financial statements will show a negative net worth. A positive net worth means the companys ability to pay bills, and a negative net worth means the companys ability to pay bills is in jeopardy. This can be a good thing if things are going well, or bad if things are going badly.
So we don’t need to worry if a company’s financial statements are bad because we have a system in place in which we review them for fairness and adherence to gaap. The system includes the auditor taking a look at the companys financial statements and seeing if the companys financial statements are in line with the GAAP standards. If they are not, then the auditor will make a note of it and send it along to the company’s Board of Directors.
The system works because we have an auditor that checks on statements to make sure that they are in line with GAAP. We also have a Board of Directors who review the financial statements from the Auditor every quarter, and if they find that the statements do not match GAAP then the Board of Directors will take action.
If a company has a GAAP audit, then the Board of Directors will review the financial statements and make a recommendation on whether or not to suspend them. The company will have to prove that the statements are not in line with GAAP. If GAAP audit is not done the company will have to show that it is in compliance with GAAP.
When we first started out in the financial statements business, we were asked to review a few companies that we had previously audited. We were asked to review companies that we had previously failed to audit. We were asked to review three companies that we had previously audited, and if they did not comply with GAAP, then we were asked to put them into “non-compliance” status.