Financial statement analysis is the process of analyzing a company’s financial statements for decision-making purposes. External stakeholders use it to understand the overall health of an organization as well as to evaluate financial performance and business value. Internal constituents use it as a monitoring tool for managing the finances.
Three main financial statements
– Balance Sheet
– Income statement
– Cash Flow Statement
All three statements are interconnected and create different views of a company’s activities and performance.
Financial Statement Analysis.
– Comparative Statement or Comparative Financial and Operating Statements.
– Common Size Statements.
– Trend Ratios or Trend Analysis.
– Average Analysis.
– Statement of Changes in Working Capital.
– Fund Flow Analysis.
– Cash Flow Analysis.
– Ratio Analysis.
– Cost Volume Profit Analysis
