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    Cherry Ann Rapana
    Financial statement analysis involves analyzing a company's balance sheet, income statement, and cash flow statement. It is used both internally by management and externally by stakeholders to evaluate financial performance and business value. There are three main techniques for financial statement analysis: horizontal analysis compares line items across years, vertical analysis compares items as percentages of totals, and ratio analysis uses statistical relationships between line items. Financial statements provide important information about a company's assets, liabilities, revenue, expenses, profits, cash flows, and overall financial position.

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    Appetizers 1

    Uploaded by

    Cherry Ann Rapana
    21 views14 pages
    Financial statement analysis involves analyzing a company's balance sheet, income statement, and cash flow statement. It is used both internally by management and externally by stakeholders to evaluate financial performance and business value. There are three main techniques for financial statement analysis: horizontal analysis compares line items across years, vertical analysis compares items as percentages of totals, and ratio analysis uses statistical relationships between line items. Financial statements provide important information about a company's assets, liabilities, revenue, expenses, profits, cash flows, and overall financial position.

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    Financial statement analysis involves analyzing a company's balance sheet, income statement, and cash flow statement. It is used both internally by management and externally by stakeholders to evaluate financial performance and business value. There are three main techniques for financial statement analysis: horizontal analysis compares line items across years, vertical analysis compares items as percentages of totals, and ratio analysis uses statistical relationships between line items. Financial statements provide important information about a company's assets, liabilities, revenue, expenses, profits, cash flows, and overall financial position.

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    © All Rights Reserved
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    Download as pptx, pdf, or txt
    21 views14 pages

    Appetizers 1

    Uploaded by

    Cherry Ann Rapana
    Financial statement analysis involves analyzing a company's balance sheet, income statement, and cash flow statement. It is used both internally by management and externally by stakeholders to evaluate financial performance and business value. There are three main techniques for financial statement analysis: horizontal analysis compares line items across years, vertical analysis compares items as percentages of totals, and ratio analysis uses statistical relationships between line items. Financial statements provide important information about a company's assets, liabilities, revenue, expenses, profits, cash flows, and overall financial position.

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    You are on page 1of 14

    Analyzing Financial statement

    To understand cost structures

    By: Charlotte B. Tacoy


    What Is Financial Statement Analysis?

    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 and to evaluate financial performance
    and business value. Internal constituents use it as
    a monitoring tool for managing the finances.
    How to Analyze Financial
    statements?
    The financial statements of a company
    record important financial data on every
    aspect of a business’s activities. As such,
    they can be evaluated on the basis of past,
    current, and projected performance.
    Three of the most important techniques
    Horizontal analysis compares data
    horizontally, by analyzing values of line items
    across two or more years.
    Vertical analysis looks at the vertical effects
    that line items have on other parts of the
    business and the business’s proportions.
    Ratio analysis uses important ratio metrics
    to calculate statistical relationships.
    Types of Financial Statements
    Balance Sheet

    The balance sheet is a report of a company’s financial worth in


    terms of book value. It is broken into three parts to include a
    company’s assets, liabilities, and shareholder equity. Short-term
    assets such as cash and accounts receivable can tell a lot about
    a company’s operational efficiency; liabilities include the
    company’s expense arrangements and the debt capital it is
    paying off; and shareholder equity includes details on equity
    capital investments and retained earnings from periodic net
    income.
    Income Statement
    The income statement breaks down the revenue that
    a company earns against the expenses involved in its
    business to provide a bottom line, meaning the net
    profit or loss. The income statement is broken into
    three parts that help to analyze business efficiency at
    three different points. It begins with revenue and the
    direct costs associated with revenue to identify gross
    profit.
    Cash Flow Statement
    The cash flow statement provides an
    overview of the company’s cash flows from
    operating activities, investing activities, and
    financing activities. Net income is carried
    over to the cash flow statement, where it is
    included as the top line item for operating
    activities. Like its title, investing activities
    include cash flows involved with firm-wide
    investments.
    Free Cash Flow and Other Valuation
    Statements
    Companies and analysts also use free cash
    flow statements and other valuation
    statements to analyze the value of a
    company. Free cash flow statements arrive
    at a net present value by discounting the
    free cash flow that a company is estimated
    to generate over time.
    Financial Performance

    Financial statements are maintained by


    companies daily and used internally for
    business management. In general, both
    internal and external stakeholders use the
    same corporate finance methodologies for
    maintaining business activities and
    evaluating overall financial performance.
    Different types of financial statement
    analysis

    First, horizontal analysis involves comparing


    historical data. Usually, the purpose of
    horizontal analysis is to detect growth trends
    across different time periods.
    Second, vertical analysis compares
    items on a financial statement in
    relation to each other. For instance,
    an expense item could be expressed
    as a percentage of company sales.
    Finally, ratio analysis, a central part
    of fundamental equity analysis,
    compares line-item data. Price-to-
    earnings (P/E) ratios, earnings per
    share, or dividend yield are examples
    of ratio analysis.
    THANK YOU!
    This is where you section ends. Duplicate this set of slides as many times you need to go over all your sections.

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