Financial Statement Analysis - 91966

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  • From: Business, Finance
  • Posted on: Tue 23 Jun, 2015
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Financial Statements are the summary of all the financial transactions made by the company. In Accounting we only consider the transactions whose value can be determined in money. There are mainly four types of financial statements. They are as follows

  1. Statement of Financial Position: - It is known as Balance sheet in common terms. It reflects the assets and liabilities of the company.
  2. Statement of Income or Income Statement: - It Shows the Profit or Loss made by the company in its business operation.
  3. Statement of Retained Earnings; It shows the actual income the company has earned after paying the dividend.
  4. Statement of changes in owners’ equity: - It shows the changes in equity capital of the company through various transactions like withdrawals made, profit of loss incurred.

Financial statement analysis (or financial analysis) is the process of reviewing and analyzing a company's financial statements. We can do financial statement analysis through horizontal and vertical analysis and through ratio analysis.

Horizontal analysis; when a comparative study of many years financial statements of any business concern are analyzed then it is known as horizontal analysis .In this analysis the data are presented in the absolute manner by calculating percentage or ratios or by preparing common size statements. For calculating the % firstly difference is taken.Net Revenue has increased from 212 to 2013 by 4.97% whereas Cost of goods has increased by 5.18% which decreases the gross profit margin to 4.34%,