Financial Statement Analysis

1.Financial Statement Analysis, specifically Ratio Analysis is often performed by managers, investors, and creditors. What is the primary goal of each of these groups when evaluating ratios?

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2. Financial Statement Analysis (FSA is the process of analyzing the financial statements of a company to evaluate its profitability and financial performance is referred as financial system analysis. The purpose of financial analysis is to ascertain business assets and stock. Financial statements such as income statement, balance sheet and cash flow statement are used to calculate financial ratios that are used to ascertain profitability, liquidity, efficiency as well as solvency.

There are several ways to analyze financial statements. such as Horizontal analysis, Vertical analysis, and a Ration analysis.

Horizontal analysis is the process of analyzing the financial performance of a company by comparing its performance in various periods is known as horizontal analysis. Trend analysis is type of horizontal analysis used to calculate the changes in economic cycle of a business for several years in terms of changes in percentage using one of the years as base year.

Vertical analysis is the process of evaluating the financial performance of a company by comparing with various companies is known as vertical analysis. Common-size analysis is a form of vertical analysis which shows the percentages of each item in relation to its base item.

Ratio analysis is the analysis of a company using the financial ratios and comparing its trends and measure its performance within the company and the companies of the industry is known as ratio analysis. The main categories of ratio analyses are liquidity ratios, profitability ratios, activity ratios, and leverage ratios.

Financial Statement Analysis Definition (investopedia.com)

Methods of Analyzing a Financial Statement (chron.com) For more information on Financial Statement Analysis check out : https://www.encyclopedia.com/finance/finance-and-accounting-magazines/financial-statement-analysis

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