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Financial Statement Analysis - Coggle Diagram
Financial Statement Analysis
Meaning
Analysis of financial statement is a systematic
process of critical examination of the financial information
in the financial statements to take various decisions.
Tools
Comparative Statement
Meaning
The comparative study of the
items of financial statements for two
or more years.
Objectives
1)Data presentation becomes comparable.
2)It indicates trends.
3)Indicates strength and weakness.
4)Forecasting and planning.
Limitations
1) Based on historical records.
2) Affected by personal judgments.
3) Ignores qualitative factors.
4) Ignores price level change.
5)Financial Statement are based on accounting
concept so, does not reflect the financial position
of the business.
Types
Comparative Income Statement
Comparative Balance Sheet
Common Size Statement
Meaning
Absolute figures are written of
two years and then percentage for
change between them is taken into
consideration.
Objectives
1) To analyse the change in each item.
2)To determine the trend of different items.
3)To access the efficiency of business.
Types
Common Size Balance Sheet
Common Size Income Statement
Cash Flow Statement
Ratio Analysis