Financial Statement Analysis - A Completet Overview

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Financial Statement Analysis A complete overview
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• Although it is sometimes difficult to persuade a
  customer to share their financial information, it
  should be understood that the financial statement
  analysis is possibly the most important tool,
  which ScoreMe Solutions provides an opportunity
  to get a clear picture of the financial position
  of the customer. This tool provides a one-stop,
  standalone portal where your sourcing team can
  browse and get details about a company in the
  form of a simple, intuitive, insightful report.
• It is absolutely essential that financial
  information is obtained on customers who make
  significant representations risk in the form of
  outstanding receivables.

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• When conducting a financial statement analysis of
  a potential or existing business client, the
  purpose is to estimating the company's past
  performance, look into at the company's future
  performance additionally. Therefore the
  performance and financial position of the
  company, in relation to others within its
  industry, can be evaluated and future risk and
  ability to meet payments in a timely fashion can
  be anticipated.
• Financial statement analysis provides an
  essential tool in the evaluation of credit risk,
  as it can provide the analyst with valuable
  information related to the trends and
  relationships of others within his industry, the
  quality of a company's earnings, and the
  strengths and weaknesses that is intrinsic to its
  business operation. Usually, financial statement
  analysis is used to analyze whether a unit is
  stable, solvent, liquid, or profitable that is
  sufficient to warrant expanding open lines of
  credit.

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• The analyst should aware about the following
  terms while doing financial statement analysis.
• Have idea of the business practices associated
  with the customer's industry.
• Good understanding of the purpose, nature and
  limitations associated with financial information
  reviewed.
• Well-acquainted with the terminology that appears
  in the financial data provided.
• Introduced and informed of the tools available to
  help clarify the results of the financial
  statement completely evaluation.

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The main three segments of financial statement
analysis are

• Balance sheet containing details of assets and
  liabilities of the business. Equity is the
  monetary difference between the value of assets
  and the value of liabilities. The balance sheet
  is structured with two columns. Assets, both
  current and long-term, appear on the left side of
  the balance sheet and the liabilities, both
  current and long-term, as well as equity appear
  on the right side of the balance sheet. The total
  value of the items on the left (current asset
  long term asset) is always equal to the total
  value Items to the right of the balance sheet
  (Current Liabilities Long Term Liabilities
  Equity). 

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• The income statement the income statement breaks
  down a revenue that a company provides to a
  bottom line, net income gain or loss, against the
  expenses involved in its business. The income
  statement is divided into three parts that help
  in analyzing business efficiency at three
  different points. It starts with revenue and the
  direct cost associated with revenue to identify
  gross profit. This then goes to operating profit
  which reduces indirect expenses such as marketing
  costs, general costs and depreciation. In the end
  it ends with a net profit that cuts interest and
  taxes.

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• Statement of cash flow that takes aspects of
  items from both the balance sheet and income
  Statements and expresses the sources and uses of
  cash. Three types of statements. This is what
  proves to be most valuable in assessing the
  ability of the client to fulfill its commitment.
• ScoreMe Solutions provides an innovative and
  useful financial statement analysis tool that
  provides insights into the organization which is
  due to be on-boarded or appraised for credit,
  customer profiling, vendor relationships, and
  lead sourcing.

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