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Financial and Projected Statements (Statement of income (This type of…
Financial and Projected Statements
General Balance
We know that the balance sheet is structured in two active and passive parts
The liability represents the means of financing available to the company, both its own and third parties, while the asset indicates in which assets and rights such means have been invested. We also know that both assets and liabilities are composed of various items that can be grouped according to their greater or lesser liquidity.
We can classify the asset in
• Fixed or fixed assets
• Current assets
Based on the enforceability criteria, the liability can be classified as:
• Own funds
• Long-term foreign capitals
• Current liabilities.
Statement of income
This type of analysis aims to determine what the framework in the company is to face the future.
A good profitability situation can be a guarantee
of future solvencies, more significant than a good current solvency.
If a company does not have adequate profitability, good solvency can deteriorate over time.
When studying profitability, we will always do it from two points of view
On the other, to the total assets established by the company's overall profitability, which indicates the average remuneration of the entire asset
On the one hand, we relate it to the company's own funds, which will link us to the return on invested capital
This allows the conclusion of whether it is appropriate to use own funds or seek outside capital
Financial reasons
One of the tools frequently used to make these verifications is a financial reason or index, which relates two elements of the information to each other.
financial by dividing one amount among the other.
Why use a reason?
We calculate the reasons because in this way we obtain a comparison that can be more useful than the numbers themselves.
Why not just look at the numbers themselves?
Analysis of Periods to Come
To carry out a financial economic analysis we will use a series of ratios or index numbers that relate items in the financial statements, to
Obtain data to interpret the various circumstances that mark the life of the company.
The analysis of a company can be performed from two different angles the static and the dynamic
The static does not take time into account. It is based on the balance sheet, which is what reflects the situation of a company at any given time, it is a photograph, a snapshot that tells us what the structure of a company is at that time
The dynamic analysis takes time into consideration, providing the possibility of evaluating the situation of the company at various times and, in this way, determining the trends in which the different patrimonial masses have moved and their interrelations.