Review Of Literature On Financial Statement Analysis

Review Of Literature On Financial Statement Analysis-3
Financial analysis are often used by investors and are prepared by professionals (financial analyst), thus providing them with the basis for making investment decisions.d) FINANCIAL INSTITUTIONS: Financial institutions (banks and other lending company) use them to decide whether to grant a company with fresh working capital or extend debt securities (such as a long term bank loan or debentures) to finance expansion and other significant expenditures. change, ozone depletion, biodiversity loss, world food security, huin the family make sacrifices as well, without the same returns. to development of an accurate shoreline and proper treatment of the land ocean boundary to ...... The two-wheeled balancing robot is a project that has become very popular of late, in the field of ...

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This review is organized under the following sub-heads for ease of comprehension. According to Meigs and Meigs (2003), the key objectives of financial analysis are to determine the company’s earnings performance and the soundness and liquidity of its financial position.

We are essentially interested in financial analysis as a predictive tool.

Matlab control system toolbox was then used to analyze the system model ..... This particular project covers the modelling of the robot, CHAPTER#2 Literature review The Literature review of this study will emphasis on the related studies on comparing and analyzing financial statements to make an investment. Objective of financial statement analysis Uses and users of financial statement analysis Classification of financial statement Relationship among the Statement of Financial Position, Income Statement, Statement of Cash Flows and Statement of Retained Earnings.

The basis of financial planning analysis and decision making is the financial information (Statements). Techniques of financial statement analysis Limitations of financial statement analysis Impact of inflation on financial statement analysis I. According to Meigs and Meigs (2003), financial statement are a structured representation of the financial position and financial performance of an entity.

However, when business conditions are good, the income statement receives more attention.

Nevertheless, a financial analyst has to grapple on the above complexities of using financial statement analysis to achieve a specific purpose. Uses and Users of Financial Statement According to Akpan (2002), financial statement may be used by users for different purposes: a) OWNERS AND MANAGERS: Require financial statement to make important business decisions that affect its operations.According to Patrick, Ralph, Barry & Susan (20-92), income statement provides the information of the transactions occurred in a certain period of time called accounting period.Expenses include purchase, administrative expenses, selling expenses, depreciation, amortization expenses and income tax paid.Almost without thinking about it, these business owners can tell you any time during the month how close they are to butting budgeted figures.Certainly, cash in bank plays a part, but its more than that.The financial information of an enterprise is contained in the financial statements. (2005) Accountancy (P#215) Financial Statement is generally explained as financial information which is the information relating to financial position of any firm in a capsule form. A Ohison (1999) was defined as a written report that summarizes the financial status of an organization for a stated period of time. (2005 Financial management) profitability is the ability of an entity to earn income. To meet these objectives, financial statements provide information about an entity’s: a) Assets b) Liabilities c) Equity d) Income and expenses, including gains and losses e) Contribution by and distribution to owners in their capacity as owners, and f) cash flows A complete set of financial statement comprises: 1) A statement of financial position as at the end of the period: 2) A statement of comprehensive income for the period; 3) A statement of changes in equity for the period: 4) A statement of cash flow for the period.The use of financial statement analysis in investment decision has been addressed by a series of authors. It includes an income statement and balance sheet or statement of the financial position describing the flow of resources, profit and loss and the distribution or retention of profit. It can be assessed by computing various relevant measures including the ratio of net sales to assets, the rate earned on total assets etc. (2001), Financial Statement simply means a declaration of what is believed to be true and which, communicated in terms of monetary unit. 5) Notes of Account comprising a summary of significant accounting policies and other explanatory information; and 6) A statement of financial position as at the beginning of the earliest comparative period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements or when it reclassifies items in its financial statements. Objective of a Financial Statement Analysis Business decisions are made on the basis of the best available estimates of the outcome of such decisions.It describes certain attributes of a company that is considered to fairly represent its financial activities. According to Meigs and Meigs (2003), the purpose of financial statement analysis is to provide information about a business unit for decision making purpose and such information need not to be limited to accounting data.Meigs and Meigs (2003) stated that the rate of return on investment (ROI) is a test of management’s efficiency in using available resources. White ratios and other relationships based on past performance may be helpful in predicting the future earnings performance and financial health of a company, we must be aware of the inherent limitations of such data.a) Income Statement Income statement measures the company’s profitability over a period of time.In the income statement, the net income is calculated by subtracting all the expenses from income.

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