Abstract:
This study is aimed at understanding what would had happened, if PTCL, used the US GAAP instead of the IFRS. It is important to realize that items contained in the financial statements have different effects. For instance, sales figure, when changed, affects the entire range of financial reports. This pervasive effect is magnified and hence affects the gross profit, net profit, taxes, equity, and deferred tax as well. This show how serious is the implication of changing an accounting framework. As this study tells that profits fell by a modest !million rupees, yet the overall equity fell by approximately 4milllion rupees. This 1 million Rs, soon transformed into a huge four million. This shows that how different rules applied to the same business can have produce varied information. Then ratio analysis was applied which showed that the change in reporting framework, changed presentation too. As a consequence, different ratios purported different ideas, which were largely caused by a different format for the statement of profit and loss. Which system fairly represents the financial information? It may be concluded that both systems are robust in nature. And to a larger degree it depends on the stakeholder as to which framework to choose. Hence, qualitative influences should be considered.
