Financial Analysis 1

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Running head: FINANCIAL ANALYSIS

FINANCIAL ANALYSIS

Name:

Institution:

Date:

FINANCIAL ANALYSIS

How to apply financial analysis techniques to other corporate or business situation.

Financial analysis also known as analysis of finance or financial statement analysis is the

assessment of profitability, viability and stability of any project or business.it mainly deal

with profitability solvency and liquidity of a firm, to ensure proper management of finance

(Warfield, 2007). To apply financial analysis to a corporate or a business, an individual looks

at the following factors,

1. Past performance of the business. You check on how the business have been fairing in

the past 5-6 years. And record the observation.

2. Future performance of the business. Using the above records that you obtained from

past and some statistical and mathematical ways, an individual may obtain prediction

of the future performance by also including present values in their extrapolation.

3. Comparing performance (comparing the financial ratios) with other firms is also a way

of applying financial technique.

Another important method is using comparative analysis (Robinson, 2009). Helps one to

determine trends by presenting information for more than two given periods and presents all

sides of the business for better analysis.in calculating ratios and comparing with other

companies, using the historical performance of a company is all about application of the

financial analysis. Since it shows how the company is using assets to bring profitability.

Opportunities of applying financial analysis.

Financial analysis can be used by many departments in business. They include; in

accounting by accountants and in banks, large investors, can be used in business loan

application, in large institutions like universities also need financial analysis, Hotels and

restaurants, and many other places (Robinson, 2009).

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1 Running head: FINANCIAL ANALYSIS FINANCIAL ANALYSIS Name: Institution: Date: 2 FINANCIAL ANALYSIS How to apply financial analysis techniques to other corporate or business situation. Financial analysis also known as analysis of finance or financial statement analysis is the assessment of profitability, viability and stability of any project or business.it mainly deal with profitability solvency and liquidity of a firm, to ensure proper management of finance (Warfield, 2007). To apply financial analysis to a corporate or a business, an individual looks at the following factors, 1. Past performance of the business. You check on how the business have been fairing in the past 5-6 years. And record the observation. 2. Future performance of the business. Using the above records that you obtained from past and some statistical and mathematical ways, an individual may obtain prediction of the future performance by also including present values in their extrapolation. 3. Comparing performance (comparing the financial ratios) with other firms is also a way of applying financial technique. Another important method is using comparative analysis (Robinson, 2009). Helps one to determine tr ...
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