Quick Financial Analysis

Imagine you go to a wedding party & start judging all based on looks, clothes, fashion sense, etc. Thus you are analyzing people around you based on various criteria right. Similarly, you can develop a futuristic opinion about the company’s performance by looking into its financial figures. Analysis of any Financial statement comprises of studying their balance sheet, P&L & Cash Flow statements to know the firm’s overall financial performance & determine its futuristic proposition. Let us discuss what parameters can help you with a quick financial analysis. Analysis of any Financial statement comprises of most common tools Historical trend analysis, financial Statement analysis & Ratio Analysis.

Profitability

Ability to earn an income consistently. Sustain growth in both short-term and long-term. Also Applying its assets effectively and profitably (Profit & Loss/Income Statement).

Solvency

Ability to pay its obligation to creditors and other third parties in the long-term (Balance Sheet).

Liquidity

Ability to maintain positive cash flow, while satisfying immediate obligations (Balance Sheet).

Stability

Ability to remain in business in the long run, without having to sustain significant losses in the conduct of its business (P&L & Balance Sheet).

Comparisons within the industry

Compare accounting numbers to those of similar companies in the same industry (Cross-Sectional analysis)

Comparison within the Financial statements

Common-size Financial Statements-Represents relationship of different items of financial statements with some common item by expressing in %.

to know how to Analyze Financial Statements quickly clock below

Analysis of any financial statement comprises — FinMargin

This post originally appeared on the Finmargin website at https://www.finmargin.com/