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2.pdf - Review of Financial Statements Preparation,...

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Review ofFinancialStatementsPreparation,Analysis andInterpretation(Part 2)O00oO
FinancialStatementAnalysisoGoalofAccounting:toprovideinformationthatallows decision makers to understand and evaluatethe results of business decisions. Managers analyzefinancialstatementstoevaluatepastfinancialperformance and make future decisions.oFinancialStatementanalysisisdefinitelyusedbymanagementformonitoringperformanceandforidentifyingstrategiestofurtherimprovethecompany’soperations.oIt involves careful selection of data from financialstatements in order to assess and evaluate thefirm’spast performance, its present condition, and futurebusiness potentials.
ObjectivesofFS AnalysisoThe primary purpose of FS analysis is to evaluate andforecast thecompany’sfinancial health.oInterestedpartiescanidentifythecompany’sfinancial strengths and weaknesses and know aboutthe:Profitability of the businessFirm’sability to meet its obligationsSafety of the investment in the businessEffectiveness of management in running the firm
GeneralApproachtoFS AnalysisoEvaluation of the environment where the companyconducts businessoAnalysis of thefirm’sshort-term solvencyoAnalysis of the company’s capital structure and long-term solvencyoEvaluation of themanagement’sefficiency in runningthe businessoAnalysis of the firm’s profitability

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Term
Fall
Professor
Maxine
Tags
Generally Accepted Accounting Principles, 7 19, 25 05, 16 98, 17 61

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