Final Exam 
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Final Exam
Use of Financial Statement Analysis to evaluate a Company’s Financial Situation
Both internal and external users highly depend on the financial statements of a company to get an understanding of the financial position. The internal users such as managers use the financial statements to help them in planning, evaluating and controlling the operations of the company. However, the external users such as financial institutions and investors use the financial statements to gauge the profitability and liquidity of the company. The analysis of financial statements helps the users understand the risk and profitability of the company. Measuring the risk analysis of a company using financial statements helps determine the underlying credit risks to the company.
 Moreover, it helps determine the solvency of the company. The use of the statement of cash flow helps determine the company's risk. Moreover, the financial statements are used in determining the profitability analysis through calculating the return on capital employed. The balance sheet shows the company's financial position in terms of the assets and liabilities the organization has at a certain date. Additionally, the balance sheet includes the shareholder's equity which is used to value a company (Gibson, 2009). The current liabilities and assets that the business holds are divided into the current and the non-current liabilities. 
The Three Major Markets found in each Foreign Market
There exist three major markets that the global market can use to acquire products which include the customer market that accounts for about fifty percent of the GDP of a country that is in the developed world, industrial market and the government market. The consumer market is used to purchase a wide variety of products ranging from food, clothes, and transportation services, services offered by banks, credit services, and entertainment. On the other hand, the industrial market involves companies trading internationally and purchase goods and services that include machinery and equipment, lubricants, services such as consultancy, cleaning, advertising and marketing. 
Moreover, in the industrial market, the companies trade raw materials and the semi-finished products. The government markets involve trade in commodities similar to those in the industrial market with an addition of infrastructural projects such as the construction of roads, bridges, dams, provision of clean water services, communication services, airport construction and port’s construction (Gaspar, Kolari, Hise, & Bierman, 2016). For the developed countries a large portion of the GDP is focused on government expenditures while for the developing nations they focus on infrastructural projects to help improve the country’s infrastructure that will improve international trade. The three markets are important for the growth of a country’s GDP and performance of the currency
Sources of Funds for International Trade and Investment
International companies have similar sources of funds as the local organizations. For the large corporations, the primary sources of the fund include debt and equity while for the smaller companies they involve the venture capital and crowd-sourcing. The large organizations use loans from banks and international financial institutions. Moreover, the government uses institutions such as IMF and the World Bank for funding on international trade and investment. The loans are given to the organizations and states for a certain period and are to be paid back in installments and at an interest rate agreed upon. Additionally, the large organizations get funding for international trade and investment from issuing bonds. Investors purchase the bonds which usually mature over time which varies from organization to organization. Large corporations, especially those that are traded in the securities, exchange also use equity shares as a source of fund. Through issuing of equity, the company sells a small portion of its ownership as an asset to the investors who focus on the profitability of the company.  For the small companies doing international trade and investment, they use the venture capitalists and angel investors who fund the business at its startup stage. Moreover, they also focus on crowdsourcing which is through the websites.

Importance of IFRS to Global Business
The International Financial Reporting Standards are important for global business operation since they provide a comprehensive financial reporting structure that is sustained by excellent accounting standards and ethical framework. The IFRS system encourages transparency and proper comparison of transactions that have occurred across borders. Therefore, it becomes easy for businesses to have cross-border mergers and acquisitions since investments are well facilitated while the regulators in each state are able to work together and develop proper supervisory practices due to uniformity (Ball, 2006). Additionally, use of IFRS by companies reduces the cost of information to the economy. There are numerous chances for companies to trade internationally and raise enough capital globally. However, if a corporation uses the home country GAAP standards it lacks investors since mostly they easily identify the probability of the existence of accounting risk in the financial statements. Financial statements prepared using GAAP standards affect the financial ratio which prevents the company from acquiring lending. Moreover, the use of IFRS provides uniform measures for recognition and disclosure, therefore, lowering the complication involved when taxing global income for multinational companies. IFRS also helps in the minimization of problems associated with the listing of a company in cross- border stock exchange since it is easy to compare the financial statements of the company.
Differences between Outsourcing and Offshoring
Outsourcing is the subcontracting of a certain job in the company that can be performed by employees to a third party. The third party that the company uses may be located in the same street, same city, different city or country (Carmel & Tjia, 2005). Therefore, outsourcing services helps the company save on labor costs. On the other hand, offshoring is the act of outsourcing work to a supplier who lives in a different country. The main aim of offshoring is for the company to benefit from lower labor costs and the laws of another country. 
Both outsourcing and offshoring bring about massive financial saving. The outsourcing firm is able to save time, money and resources. Moreover, the company is able to save on the cost of infrastructure and technology. The company also minimizes the costs to be incurred for labor. The time of delivery of services become faster as the core focus of the outsourced or out the shored company is delivering the services required unlike when the company used its own employees. Outsourcing and off shoring is mainly faced by language, time and the cultural barrier which may reduce the profitability of the company. The quality of the products and services by the outsourced company may be lower as compared to that of the parent company. Moreover, there may be cases of habitual delays in delivery especially for offshore companies if they are not well equipped 

References
Ball, R. (2006). International Financial Reporting Standards (IFRS): pros and cons for investors. Accounting and business research, 36(sup1), 5-27.
Carmel, E., & Tjia, P. (2005). Offshoring information technology: sourcing and outsourcing to a global workforce. Cambridge University Press.
Gaspar, J., Kolari, J., Hise, R., Bierman, L., & Smith, L. (2016). Introduction to global business: Understanding the international environment & global business functions. Nelson Education.
Gibson, C. (2009). Financial reporting & analysis (1st ed.). Mason, OH: South-Western Cengage Learning.