BY Dr.

Beena Fernandez

Financial factors of a Business

Gross Cost of Profit Income Goods Margin

INCOME STATEMENT
FINANCIAL STATEMENTS

POSITION STATEMENT

Financial

Statement

Analysis

(FSA)

will

help

business owners and other interested people to analyse the data in financial statements to provide them with better information about such key factors for decision making and ultimate business survival.

SHARE HOLDERS INVESTORS DEBENTURE HOLDERS

INTERESTED PARTIES AUDITORS

BANKERS

JOURNALISTS

TRADE CREDITORS / SUPPLIERS

 To evaluate an organisations
Financial performance Financial position.

To have a means of comparative analysis across time in terms of:

Intracompany basis Intercompany basis Industry Averages

To aid decision making.

CREDITORS INVESTORS
MANAGEMENT

Questions raised by credit analyst pose: What is the borrowing cause? What is the firms capital structure? What will be the source of debt repayment ?

The investment analyst poses questions as: How has the firm performed? What are its future expectations? How much risk is inherent in the existing capital structure? What are expected returns? What is firms competitive position?

Management looks to the analysis data to determine: How well the firm has performed and why? What operating areas have contributed to success and which have not? What are strength and weaknesses of companys financial position? What changes should be implemented to improve future performance?

These include: Comparative Statements Common Size Statement Trend Analysis Cash Flow Statement Fund Flow Statement Ratio Analysis Break-Even Point Analysis

Comparative Statements compare: Horizontally Vertically / Common Size Statements

It is of two types : Comparative Income Statement Comparative Balance Sheet.