Financial Statement Analysis

Running head : FINANCIAL STATEMENT ANALYSIS
Financial Statement Analysis
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1FINANCIAL STATEMENT ANALYSIS
Executive Summary:
This report aims to conduct a detailed study of three types of financial statements. It identifies
these statements and analyses the components which have an impact on the operational
decision making of the company. It also studies three basic accounting equations along with
two accounting assumptions and provides an insight into their impact on the financial
statements and their preparation. It concludes by suggesting the importance of financial
statements to the organization and the need for improving them with time.

2FINANCIAL STATEMENT ANALYSIS
Table of Contents
Introduction................................................................................................................................3
The three financial statements:...................................................................................................3
Three accounting equations used in accounting practices:........................................................5
Two assumptions used in accounting practices:........................................................................6
Ratio Analysis of the company..................................................................................................7
Conclusion................................................................................................................................10
Reference..................................................................................................................................11

3FINANCIAL STATEMENT ANALYSIS
Introduction
The report is prepared to evaluate the financial position of Example Corporation by
using the tool of ratio analysis. Assessment of the financial position is done by the
computation of ratios such as profitability and liquidity ratios. The liquidity position of
Example Corporation is evaluated by the computation of ratio such as working capital, quick
ratio, current ratio and time interest eared ratio (Minnis & Sutherland 2017). In addition to
this, the profitability position of the company is evaluated by the computation of ratios such
as gross profit margin, profit margin, earning interest per share and return on stakeholder
investment. The report also demonstrates the comparison of the values of the ratio to the
industry values along with presenting the conclusion remark on the overall performance of
company.
The three financial statements:
Three financial statements which has been taken fr a detailed analysis and discussion
are
 The Income Statement
 Balance Sheet
 Cash Flow Statement
The Income Statement- It shows the profit or loss for a profit making organization,
and revenues and expenses for a non-profit making organization, at the end of a period ( it
can be quarterly or annually)Van Auken, H., &Carraher, S. (2013).
The components of The Income Statement are:
 Revenue- It is the amount of money the organization receives mainly from sales, net
sales. It is reported at the top of the income statement.