Financial statement ****ysis refers to the scrutiny and evaluation of financial statements of a company to ascertain its fiscal strengths and weaknesses. It is essential for accounting students to become experts in this as it is a deciding factor in future career prospects.
Objectives of financial statement ****ysis
The major reason for ****yzing balance sheet and income statements is to enable decision making. A thorough scrutiny of these will help to know where the company is headed. If it shows a downward trend, measures can be taken to rectify them in time.
Who uses the data?
It is used by company management to reflect fiscal position. But apart from this, many other stakeholders like investors and lenders also undertake ****ytical studies to protect their interest. This makes it quite significant from every point of view. Students of accounting should devote enough time for learning these concepts. Financial statement ****ysis assignment help is useful for students in learning basics.
Types of ****ysis
Several techniques are used for ****yzing income statements depending upon individual needs.
Horizontal ****ysis: Here financials over a period of time are compared. The ****yst will select data for a specified period from company’s records and ****yze it to know the earning trends. It helps to find whether earnings per share have increased or decreased over time. It is indicative of the growth of companies.
Vertical ****ysis: In this type, each item of income statements is stated as a percentage of another item. It is more advanced than horizontal ****ysis as percentage method is employed. For example, every item in profit and loss a/c is stated as a percentage of gross earnings. This is used to ****yze relative sizes of different account heads.
Ratio ****ysis: In this method, ratios are used to judge financial statements. Ratios are calculated from income statements and thereafter they are used to examine fiscal factors pertaining to companies. Different types of ratios like liquidity ratios, solvency ratios, and efficiency ratios are employed depending upon objectives of ****yzing.
Fundamental ****ysis: This involves ****yzing fundamental financial statements of a business in relation to its competitors. This focuses on the general state of the economy. It is done for purposes of making financial forecasts.
DuPont ****ysis: This is a specialized ****ytical technique devised by DuPont Corporation. This breaks the return on equity into three parts, profitability, financial leverage and asset efficiency. This method is used only in a selected few industries.
Going the online way for learning
As students of accounting struggle to learn concepts of financial statements, online help can be availed for ease of learning. The online sources offer various advantages:
Time-saving is a big reason for resorting to tech help. Assistance is available in split seconds.
Sites can be accessed from anywhere. Students sitting in even remotest parts can get the latest information, thanks to technology.
Whatever be the topic, help is readily available. Apart from financial statements, other topics like project management homework help, accounting solutions etc. are also quite popular.
From above discussion, it is clear that study of financials is not a big hurdle, if approached systematically and with dedication.
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