Analysis of financial statements is an assessment of the solvency, creditworthiness, profitability, as well as the investment attractiveness of the enterprise. Analysis of the company's reporting enables potential partners to conclude that further work with it is necessary.
Instructions
Step 1
In order to quickly and efficiently conduct an analysis, it is not necessary to have all the enterprise reporting at hand. This requires only two forms: "Balance Sheet" and "Profit and Loss Statement". It is good if there is an opportunity to see the indicators in dynamics for 2-3 years.
Step 2
When analyzing the financial statements, it is necessary to pay attention to the absolute indicators, which make it possible to judge the sources of financing available to the enterprise, their spending, the availability and distribution of profits, and the availability of financial resources. At the same time, the most problematic items should be identified, as well as their indicators should be compared with previous reporting periods (for example, volumes of work in progress, overdue receivables and payables, etc.).
Step 3
Further, a horizontal analysis of all indicators of financial statements is carried out. At the same time, the change in percentage ratios over several years is determined. For example, the growth in revenue, net income, interest and loans, fixed assets and other items is calculated.
Step 4
In addition, a vertical analysis is carried out, which involves calculating the share of each reporting indicator in the total volume. For example, the percentage of overdue accounts payable in the amount of short-term liabilities, the share of finished goods in the volume of inventories.
Step 5
Further, the tendency of the firm's activity is revealed. For this, the indicators of the base period are taken as 100 percent, and the values of the following periods are calculated on the basis of this, which allows us to forecast the work of the enterprise for the future.
Step 6
In addition, when analyzing financial statements, a number of ratios (profitability, liquidity, solvency) are calculated, which make it possible to say about the compliance of the company's financial activities with generally accepted standards.
Step 7
In some cases, when analyzing financial statements, it is useful to compare the obtained indicators with the industry average or with the indicators of competing firms in order to identify the place of the enterprise in the market.
