Financial Statement Analysis & Their Implication To Management
Financial Statement Analysis & Their Implication To Management
Financial Statement Analysis & Their Implication To Management
Presented by
GROUP 7:
PANUELOS, ANGEL
ALTAVANO, MA. ISABELA
SECILLANO, ALYSSA
AGARIN, GILBERT
Financial Statement 01 What is Financial Statement Analysis ?
Analysis & their
Implication to 02 Purpose of Financial Statement Analysis
Management
03 Types of Financial Statement Analysis
What to Know
04 Methods of Financial Statement Analysis
Financial Statement Analysis is the collective name for the tools and
relevant information to the decision makers. The purpose of FSA is to
assess the financial health and performance of the company.
PURPOSE:
To use financial statements to evaluate an organisation's
- Financial performance
- Financial position
- Prediction of future performance
To have a means of comparative analysis across time in terms of:
- Intracompany basis (within the company itself)
- Intercompany basis (between companies)
- Industry Averages (against the particular industry's averages)
To apply analytical tools and techniques to financial statements to
obtain useful information to aid decision making.
Financial Statement Analysis involves analyzing the information
provided in the financial statements to:
Provide information about the organisation's:
- Past performance
- Present condition
- Future performance
Internal Analysis
Analysis by the owners, management and employees
Carried out to find the strength and weakness of the company
To find the growth rate of the company
To carry out the future actions
External Analysis
Analysis done by the external parties by investors, financial analysts,
lenders, and general public
The purpose is to know the financial and operating performance
To know about the credit worthiness
To know about the safety of their investment
TYPES OF FINANCIAL STATEMENT ANALYSIS:
2. According to Modus Operandi
Horizontal Analysis
Analysis of financial statements for different periods
It explains whether there is a growth over a period of years
This analysis may be conducted for two years or any number
of years
Is a percentage analysis of changes in comparative financial
statement
Vertical Analysis:
Analysis of Financial Statements for one period only
Is a percentage analysis used to show the relationship of
each component to the base total within a single statement.
TYPES OF FINANCIAL STATEMENT ANALYSIS:
Horizontal Analysis
FORMULA:
Comparison year amount - Base year amount x 100
Base year amount
Vertical Analysis:
FORMULA:
Statement line item x 100
Total base figure
EXamplE IN HORIZONTAL ANALYSIS
VERTICAL ANALYSIS- BALANCE SHEET EXAMPLE
VERTICAL ANALYSIS- INCOME STATEMENT EXAMPLE
Methods of Financial Statement Analysis: