LaMar Van Dusen

1
L A M A R V A N D U S E N
Financial Analysis
2
Financial Analysis
Financial analysis is the process of evaluating
businesses, projects, budgets, and other
finance-related transactions to determine their
performance and suitability. Typically, financial
analysis is used to analyze whether an entity is
stable, solvent, liquid, or profitable enough to
warrant a monetary investment.
3
1. Reviewing the performance of a company over
the past periods

1. Assessing the current position operational
   efficiency
2. Predicting growth profitability prospects
3. Loan Decision by Financial Institutions and Banks

Objectives
4
Types of financial analysis

1. Horizontal analysis. This involves the
   side-by-side comparison of the financial results
   of an organization for a number of consecutive
   reporting periods.
2. Vertical analysis. This is a proportional
   analysis of the various expenses on the income
   statement, measured as a percentage of net sales.
3. Short term analysis. This is a detailed review of
   working capital, involving the calculation of
   turnover rates for accounts receivable,
   inventory, and accounts payable.
4. Multi-company comparison. This involves the
   calculation and comparison of the key financial
   ratios of two organizations, usually within the
   same industry.
5. Industry comparison. This is similar to the
   multi-company comparison, except that the
   comparison is between the results of a specific
   business and the average results of an entire
   industry.

5
Limitations

1. Dependence on historical costs.
2. Inflationary effects
3. Intangible assets not recorded
4. Based on specific time period
5. Not always comparable across companies
6. Subject to fraud
7. No discussion of non-financial issues
8. Not verified
9. No predictive value

6
V I S I T U S
https//twitter.com/v andal2121
https//www.facebook. com/lamarvd/
https//www.youtube.co m/watch?vqnCe6Ak4_6I
7
Thank You
Visit us soon