Various tools used to do Financial Statement Analysis [Green University of Bangladesh]

Various tools used to do Financial Statement Analysis

1. Various tools used to do Financial Statement Analysis Presented By: Reduanul Islam; Id: 211005007; MBA

2. Financial Statement Analysis (FSA) - The process of examining an organization's financial statements position for decision-making purposes.

3. Four different core tools of FSA Horizontal Analysis Vertical Analysis Ratio Analysis Cash-flow Analysis

4. Horizontal Analysis Also known as trend analysis and it is the comparison of past data over several accounting periods to shows the growth of the company. Calculation formula: [ (Non-base years – Base year) ÷ Base year] × 100

5. Vertical Analysis List each line item of income statement as a percentage of a base. The first line of the statement always shows the base figure at 100%, with each following line item representing a percentage of the whole. F ormula : (Statement line item / Base figure) × 100

6. Ratio Analysis Ratio analysis is a quantitative method of gaining insight into a company's liquidity, operational efficiency, and profitability by studying its financial statements such as the balance sheet and income statement.

7. Few indicators that uses to predict R atio Analysis: Current Ratio = Current Assets(CA)/Current liabilities(CL) Quick Ratio = CA – Inventory/CL Debt-Equity Ratio = Long-term debt/Long-term debt + Equity

8. Cash-flow Analysis Determines a company's working capital, the amount of money available to run business operations and complete daily transactions. Calculation formula: (Current Assets – Current Liabilities).

9. Other tools that also used to do FSA Common Size Statements; Average Analysis; Fund Flow Analysis; Cost Volume Profit Analysis etc.

10. Conclusion If we wanted to examine our company’s growth and financial position of past several years or a particular year and quantitative expression of the company, then we must needs to follow the tools that uses to do financial statement analysis.

11. References https :// www.indeed.com/career-advice/career-development/horizontal-vertical-analysis https:// www.investopedia.com/terms/r/ratioanalysis.asp https:// www.netsuite.com/portal/resource/articles/financial-management/cash-flow-analysis.shtml https://accountlearning.com/tools-techniques-financial-statement-analysis/