Financial statements cannot be critically examined unless companies disclose the methods used in obtaining the figures in the statements. In a recent attempt to review and analyze statements of food companies, it became apparent that the disclosure policies of the 217 companies examined were something less than desirable. In particular, most of the companies did not report depreciation methods and about one-half of them reported only a very nebulous "Lower of Cost or Market inventory valuation method. Financial statements are supposed to supply stockholders, investors, governmental agencies and other interested parties with sufficient information to provide a good foundation for making decisions about the performance of individual companies. Unless the methods and policies underlying the reported figures are disclosed so there is no question as to that meaning of the figures, the data may be of limited value. If financial statements are to be used for something more than advertising and fulfillment of legal obligation then policies that are every hit as important as the data should be adequately disclosed.

As has been pointed out by other authors, business accounting systems are similar in nature to social or macro-accounting systems. In this case, business accounting data were put into a Leontief input-output framework and changes in the accounts predicted by the system. It was found that the estimated changes were very close to actual changes for two accounts and somewhat variable for the other two accounts. The input-output system provides a method whereby management can predict changes in the level of the balance sheet accounts which arise from some level of operations, analyze the dollar flows into and out of accounts, or investigate the impact on the accounting system and level of accounts brought about by changes in operating levels and conditions. The framework, common to all firms, also provides a uniform procedure for aggregating firm data and thus is a method of consistently establishing an inter-firm analysis for an industry or an inter-industry analysis for the economy. In order to fully assess the value of the system for financial analysis and planning, a more detailed and expanded system is needed. This would require analysis of the individual accounts and their relationship to each other under normal operating conditions. Changes in operating or accounting procedure as well as technological changes would influence the applicability of the system and the specification of the coefficients.