FINANCIAL'MANAGEMENT'
CHAPTER'3
1. Financial Statement Analysis:
- Importance: Financial statement evaluation involves comparing
a corporation's monetary performance, position, and coins flows
for choice-making.
- Users of Financial Statements:
- Internal: Management, employees.
- External: Investors, creditors, analysts, regulatory government.
2. Horizontal Analysis:
- Definition: Also called trend evaluation, it compares economic
information over one of a kind intervals to perceive traits and
modifications.
- Formula: ((Current Year - Previous Year) / Previous Year) * a
hundred.
- Purpose: Identifies boom quotes or declines in financial line
items.
3. Vertical Analysis:
- Definition: Expresses every line object on a monetary assertion
as a percentage of a base object.
- Formula: (Individual Item / Base Item) * a hundred.
- Purpose: Helps recognize the composition of different additives
in terms of a total or base.
4. Common-Size Statements:
- Definition: Presents all objects as probabilities of a
commonplace base, normally general revenue or general assets.
- Purpose: Facilitates contrast between businesses of different
sizes.
5. Ratio Analysis:
