Financial Statement Analysis

All the techniques used to show important relationships among amounts in financial statements.

Generally begins with the calculation of a set of financial ratios designed to reveal the relative strengths and weakness of a company as compared with other companies in the same industry, and to show whether its financial position has been improving or deteriorating over time.

In analyzing a small firm's financial position, ratio analysis is a useful starting point. However, the analyst must also:

examine the quality of the financial data,
ensure that firm is sufficiently diversified to withstand shifts in customers' buying habits, and
determine whether the firm has a plan for succession of its management.

See also...

Benchmarking
Objectives of Financial Statement Analysis
Ratio Analysis
Sources of Information for Financial Statement Analysis
Standards for Financial Statement Analysis
Trend Analysis
Vertical Analysis

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