The importance of financial reporting transparency and ways to improve its analysis in Georgian enterprises (research project for enterprise management)
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2019
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Abstract
The association agreement between Georgia and the European Union obliges Georgia to gradually bring its legislation into line with EU law and international legal instruments. One of the areas that European legislation dictates to Georgia is to increase the transparency of business financial reporting in the country. This will help increase the quality of enterprise management. Following the signing of the Association Agreement with the EU, Georgian enterprises are required to publish financial statements. In Georgia necessary to establish transparency of financial reporting. Financial reporting is a key information source for analyzing the financial and economic performance of companies. This information helps enterprise management to fully control the company's solvency, financial position, risks and profitability, and to make adequate decisions. Thus, the issues of the financial reporting methodology have not lost its actuality. The purpose of the research project is to develop and deliver methodological and practical recommendations for financial reporting analysis to Georgian enterprises as well as to other stakeholders. The subject of the project research is the financial statements published on the financial reporting portal, based on which the recommendations will be developed for the identified gaps. The study was selected ten Georgian enterprises from different sectors, except for the financial sector. The study uses quantitative and qualitative analysis methods. Specifically, mathematical tools, factor elimination method, vertical, horizontal and ratio analysis methods are used. The practical significance of the study is that any practical and methodical recommendations provided by the community process can be applied to any enterprise registered in Georgia (except the financial and public sector). The report recommends that all enterprise management regularly apply the methods of vertical, horizontal and coefficient analysis of financial statements presented in this work; Using a multi-factor model of cash flow numbers, organic capital structure, profitability, operational and financial leverage indicators developed by one of the authors will help enterprise management measure the impact of factors on the deviation of these indicators and make appropriate decisions. The research presented in Georgia is the first attempt to help business owners and managers understand, on the one hand, that the transparency of financial statements, which not only publishes them but also publicly discusses them, is not unnecessary or dangerous. This scientific-research project will be provided to all interested persons as a recommendation. The successful implementation of project recommendations in practice will be one of the strong empirical results of cooperation and partnership between the scientific sector and the practical economic sector. Keywords: financial reporting, transparency, solvency, profitability, leverage, factor-models.
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The importance of financial reporting transparency and ways to improve its analysis in Georgian enterprises (research project for enterprise management), Tbilisi, 2019, 202 p.