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Financial Statement Analysis Assignment Help

It is important to have an overview of the basics of financial statements before discussing this topic. Here are some of these basics;

  1. Cash Flow Statement: This statement reports on cash outflows and inflows to the organization during the analysis period.
  2. Profit and Loss Account: These records report the amount that the firm earned during the analysis period. Some financial experts refer to it as the income statement.
  3. Balance Sheet: This is a summary of what the organization owes and owns at a particular time.

Financial analysis or financial statement analysis entails the selection, evaluation and the interpretation of financial data among the other information that is pertinent. These statements assist managers to assess the current and future performance and financial condition of the organization. It can also be described as the process of understanding the profitability and risk of the firm by analyzing the reported financial information through the use of various accounting techniques and tools. It entails an evaluative approach that is used to determine the projected, current and past performance of the entity.

Financial Statement Analysis Tools

  • Trend Analysis: This is a vertical form of statement where you take the previous year as the base year and you relate all the items that are in the financial statement to the base year as a percentage by considering the value of all items in the base year as 100.
  • Comparative Statements: This statement shows the financial position of the enterprise and it allows the manager to compare various accounting items in order to measure the performance of the enterprise activity.
  • Proportion Analysis: There are several ratios that can be used to discern the existing relationship between the sizes of several accounts in financial statements.
  • Common size Statements: This statement is in the vertical form and reduces all the items in the financial statement to a common base.
  • Ration Analysis: Entails calculating and comparing balance sheet ratios with those of the past years.

Types of Financial Statement Analysis

  • Vertical analysis
  • Horizontal analysis
  • Industry standard or average analysis
  • Inter-firm comparison
  • Intra-firm comparison

Benefits of Financial Statement Analysis

  • It guides investors on the best way of investing their funds in a given corporation
  • Can assist the regulatory authorities to make sure that companies comply to the set accounting standards
  • Can assist government agencies to analyze the taxation that various firm owe
  • The company can use these statements to analyze their own performance over a particular period of time.

Limits of Financial Statement Analysis

Comparing Between Different Periods: The organization that prepares financial statements could have made changes in their accounts where it stores its financial information, and the results of different periods may differ from one to another.

Comparing Companies: Analysts carry out a comparison of the financial ratios of various companies to determine whether they match with one another. The challenge is that various companies use different ways of aggregating their financial information and this makes it hard to compare the results of their ratios. The situation can make analysts to draw the wrong conclusions on the corporation’s results while comparing with the competing brands

Operational Performance: Financial analysis only takes an overview of the financial information of the company and leaves behind the operational conformation of the organization.

Conclusion

Financial statement analysis focuses on the analysis of the income statement and the balance sheet of the business. The process allows the analyst to interpret business ratios for the purposes of financial forecasting, business evaluation, and financial representation. It is just a portion of the total picture and you can get financial statement analysis assignment help from ezassignmenthelp.com. therefore, we hold all the answers to who will do my financial statement analysis homework.

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