Financial Statement Analysis Approaches
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Added on 2019-12-03
Financial Statement Analysis Approaches
Added on 2019-12-03
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Financial statement analysis
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3Overview of organization................................................................................................................3APPROACHES TO ANALYZE AND INTERPRETE FINANCIAL STATEMENTS.................3INTERNAL AND EXTERNAL FACTORS WHICH BRING CHANGE IN THE RATIOS......13CONCLUSION .............................................................................................................................15REFERENCES..............................................................................................................................172
Index of TablesTable 1: Profitability ratio of Volkswagen......................................................................................5Table 2: Profitability ratio of BMW................................................................................................6Table 3: Liquidity ratio of Volkswagen.........................................................................................10Table 4: Liquidity ratio of BMW...................................................................................................10Table 5: Table 5: Activity ratio of Volkswagen............................................................................12Table 6: Activity ratio of BMW.....................................................................................................12Table 7: Table 7: Solvency ratio of Volkswagen...........................................................................14Table 8: Solvency ratio of BMW...................................................................................................153
INTRODUCTIONFinancial statement of any organization are the main documents which contain detailinformation related to performance of an organization for particular time span. It assistscorporation to integrate all resources together in order to ensure long run success with increasedrate of return. Present report is based on The Volkswagen group which manufactures anddistributes passenger and commercial vehicles. Along with that other products such asmotorcyles, engines and turbomachinery. In addition to this, ratio analysis has been done toanalyze the performance. Furthermore, impact of external factors has also assessed which aid todetermine future.OVERVIEW OF ORGANIZATIONVolkswagen is German manufacturer of car which was established in 1946. It wascreated by German Labour Front and group of labor played active role in the formation of thisorganization. The corporation is operating in Automotive industry which consists of range ofcompanies and organizations. The corporation under study is second largest automaker afterToyota. The Volkswagen Golf, the Volkswagen Beetle and the Volkswagen Passat come undertop 10 list of best selling cars. Further, key products sold by the company consists of Cars,Trucks and buses. In 2010 company posted record for sales of 6.29 million vehicles with theglobal market share 11.4%. Furthermore, Similarly, in 2013 the sales turnover of corporationhas increased by 9.7 million. However, it was 9.3 million in 2012. It is showing slow growth ofcorporation of marketplace. Apart from this, Volkswagen is performing good in context ofenvironment and also registered with a Corporate Average Fuel Economy. It was the first carmanufacturer which applied ISO 14000. Later on, 2013 the Volkswagen XL1 considered as mostfuel efficient production car of the world. APPROACHES TO ANALYZE AND INTERPRETE FINANCIALSTATEMENTSThere are two methods to analyze the financial statement of an organization. The first oneis horizontal and vertical analysis. Here, horizontal analysis is done with comparison of financialstatement over a series of reporting period. On the other hand, vertical analysis is done on thebasis of proportional analysis of financial statement (Acton, 2013). However, percentage of each4
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