Presentation on Financial Accounting

In: Business and Management

Submitted By arahan2012
Words 1318
Pages 6
Presentation On Analysis of Financial Statements.

Prepared By: Md. Nazmul Hasan.

Analysis of Financial Statements
What is Financial Statement Analysis:
Financial Statements Analysis is an Analysis of the Following Statements:
Income Statement Balance Sheet Statement of Owners Equity and Statement of Cash Flow

Purpose of Analysis
Financial statement analysis helps users make better decisions.

Internal Users
Managers Officers

External Users
Shareholders Lenders Customers

Financial Statements Are Designed for Analysis
Classified Financial Statements
Items with certain characteristics are grouped together.

Comparative Financial Statements
Amounts from several years appear side by side.

Consolidated Financial Statements
Information for the parent and subsidiary are presented.

Results in standardized, meaningful subtotals.

Helps identify significant changes and trends.

Presented as if the two companies are a single business unit.

Tools of Analysis:

Dollar & Percentage Changes
Component
Percentages

Trend
Percentages

Ratios

Dollar and Percentage Changes or Horizontal Analysis
Dollar Change:
Dollar Change

=

Analysis Period Amount



Base Period Amount

Percentage Change:

%

Percent Change

=

Dollar Change

÷

Base Period Amount

Dollar and Percentage Changes or Horizontal Analysis
ABC, Inc. Comparative Balance Sheets December 31, 2005 Assets Current assets: Cash and equivalents Accounts receivable, net Inventory Prepaid expenses Total current assets Property and equipment: Land Buildings and equipment, net Total property and equipment Total assets * Percent rounded to one decimal 2004 Dollar Change Percent Change*

12,000 60,000 80,000 3,000 $ 155,000 40,000 120,000 $ 160,000 $ 315,000 point.

$

23,500 40,000 100,000 1,200 $ 164,700 40,000 85,000 $ 125,000 $ 289,700

$…...

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