Financail Statement Analysis

2.          Financial Statement Analysis 2.1          Introduction Financial analysis applies uninflected tools to fiscal data to assess a phoners performance and trends in that performance. The purpose of this chapter is to describe various techniques which jackpot be used to analyze a companionships financial statements. The primary source of data is a companys financial reports, including the financial statements, footnotes, and managements word of honor and analysis. Financial analysis of a company may be performed for a variety of reasons, such as valuing equity securities, assessing consultation risk, conducting due diligence related to an acquisition, or assessing a foot soldier s performance. 2.2          The Objectives of the Financial Analysis Process The financial analytical glide path should be tailored to meet the specific requirement as there tooshie be variety of reasons for performing financial analysis, the numerous available techniques, and the substantial amount of data. The following points should be kept in mind: ?         Purpose of the analysis ?         Level of position required ?         Data to be presented to whom Having clarified the purpose and context of the analysis, we can then move on to the selection of the techniques (e.g.

, ratios) that will stovepipe assist in making a decision. 2.3          Ratio Analysis in that respect are many relationships between financial accounts and between anticipate relationships from one point in time to another. Ratios are a useful way of expressing these relationships. Ratios express one quantity in relation to another (usually as a percentage or times). The universe of ratios is limitless as are no commanding bodies specifying exact formulas for computing ratios or providing a standard, comprehensive run of ratios. Formulas and even names of ratios often differ from analyst to analyst or from database to database. Financial ratios provide insights into: ?         Relationships within a company that help... If you want to get a full essay, order it on our website: Ordercustompaper.com

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