Tools and Techniques of Financial Statement Analysis

by Craig Stewart Chief of Marketing & Sales

Financial statement analysis is carried out using various tools and techniques. It plays a vital role in business as it focuses on the financial statements of the company. There are about nine important tools and techniques of financial statement analysis. Some of them explained in Financial Statement Analysis are given below: -

· Common- Size Statements- In common-size statements, the figures are shown as percentages of total assets, total sales, and total liabilities and are also known as a component percentage. It can be prepared in two ways- either by taking total liabilities or assets as 100 or by taking individual assets as a percentage of 100. The two types of common-size statements are- common size income statement and common-size balance sheet. The vertical analysis method is applicable to the preparation of this statement.

· Fund Flow Analysis- It deals with the transaction of funds over a specific period of time. Fund flow analysis tells us about the change in the financial structure of the company.

· Trend Analysis- It is also known as a pyramid method. Under trend analysis, first ratios of different items are found out and then it is compared.

· Cost Volume Profit Analysis- this analysis deals with the prevailing relationship among cost, sales, and profit. The cost is of two types- fixed cost and variable cost. It helps the management for a better profit planning.

· Other tools and techniques are- cash flow analysis, comparative statements, ratio analysis, statement of changes in working capital and average analysis.

Topics covered under Business Analytics Assignment Help:

Business Analytics (BA) is an important subject for students studying in colleges and universities. Our experienced writers assist students with their assignments on business analytics. Students are free to choose their own mentors and can avail assignment help services. Those students who could not comprehend the concept can select doubt clearing classes which will be conducted by our professionals. Our experts have given their best to cover all the topics that come under business analytics. Important topics of business analytics covered under Business Analytics Assignment Help are given below: -

1. Applications of Business Analytics- It has a wide range of application in business as it provides up-selling opportunities, improved customer service, simplified inventory management, critical product analysis, competitive price insights, etc.

2. Importance of Business Analytics- It understands the business performance on the basis of the quantitative analysis, statistical methods, fact-based management, data and predictive modeling. It also helps the management to handle all market problems in an effective way.

3. Objectives of Business Analytics- one of the main objectives of business analytics is to help the management in collecting insight data of the market. It understands all factors related to the business and provides effective results. Business analytics is also employed to evaluate complex statistical data.

4. Accounting Analytics- It is one of the important concepts of business analytics. It is used in business to plan, budget, manage and audit data in order to generate reports.

About the Author:

Craig Stewart is an author of this article who writes about the importance of Financial Statement Analysis Assignment Help. He has also written about Business Analytics Assignment Help.