Financial
statement
analysis and
trend Analysis
,WHAT IS FINANCIAL STATEMENT ANALYSIS?
Financial statement analysis is a component of accounting and key to
understanding an organisation’s financial condition. External
stakeholders use it to understand the overall performance and business
value of an organisation, while internal constituents use it as a
monitoring tool for managing finances.
Acting as a company’s financial health ‘report card’, it comprises the
review of three significant financial statements that every company
must maintain: the balance sheet, income statement and cash flow
statement.
Balance sheet: summary of the assets, liabilities (debt) and equity of a
business at the end of an accounting period and a report of the
company’s financial worth in terms of book value.
, Income statement: a detailed account of a company’s revenue
earning (also known as the profit and loss statement).
Cash flow statement: provides data on how much cash or cash
equivalent circulates the company via various inflows and outflows,
spanning ongoing operational activities, external investment sources
and cash from financing.
As such, a financial statement analysis provides a comprehensive and
unbiased overview of a company’s profitability, value, credit
worthiness and financial security.
statement
analysis and
trend Analysis
,WHAT IS FINANCIAL STATEMENT ANALYSIS?
Financial statement analysis is a component of accounting and key to
understanding an organisation’s financial condition. External
stakeholders use it to understand the overall performance and business
value of an organisation, while internal constituents use it as a
monitoring tool for managing finances.
Acting as a company’s financial health ‘report card’, it comprises the
review of three significant financial statements that every company
must maintain: the balance sheet, income statement and cash flow
statement.
Balance sheet: summary of the assets, liabilities (debt) and equity of a
business at the end of an accounting period and a report of the
company’s financial worth in terms of book value.
, Income statement: a detailed account of a company’s revenue
earning (also known as the profit and loss statement).
Cash flow statement: provides data on how much cash or cash
equivalent circulates the company via various inflows and outflows,
spanning ongoing operational activities, external investment sources
and cash from financing.
As such, a financial statement analysis provides a comprehensive and
unbiased overview of a company’s profitability, value, credit
worthiness and financial security.
