Wagner Company operates a small chain of department stores. The company owner wants to open two additional stores next year, but the company does not have sufficient cash to finance this expansion project. To raise the needed funds, Wagner has asked several friends to consider investing in the firm. She has provided these individuals with audited financial statements for Wagner Company’s most recent fiscal year.
Required:
(a) Besides the audited financial statements, what additional information do you believe potential investors would want to obtain before deciding whether to invest in Wagner Company? Be specific.
(b) Which financial reporting objective or objectives will Wagner Company’s audited financial statements help satisfy in this context?
(c) Which of Wagner Company’s financial statements do you believe the potential investors will find most useful? Defend your answer.