In order to perform a sound financial analysis, the understanding of financial reports and awareness of particular areas that require restatements in order to provide accurate information, becomes crucial.
The following are some additional analytical processes in widespread use: Direct measurements (relationship between debt and equity);
Basic to analyst’s work is the ability to reconstruct the business transactions that are summarized in the financial statements. One can visualize this important skill as the ability to replicate the accountant’s work but in reverse order. The flow of analyst’s work:
The process of Financial Statement Analysis consists of the application of analytical tools and techniques to financial statements and data in order to derive from them measurements and relationships that are significant and useful for decision making. Thus financial statement analysis first and foremost serves the essential function of converting data into useful information, which […]
