Answer to Question #219231 in Accounting for prakash reddy

Question

This pandemic situations has drawn the attention of a lot of individuals to actively watch and participant in the Indian financial market. As a life-long learner, you also decide to understand the fundamentals of certain companies listed on the stock exchanges in India. One of your friends advised you to look in to the various techniques of financial analysis, as one of the way of evaluating the financials of business entities. You are done with getting an understanding about various techniques of financial analysis. Elaborate any five of the said techniques for financial analysis.

Answer 1

Techniques for financial analysis.

1.Vertical Analysis 

In this method, the factors of a business are shown in the form of a percentage of a fixed value.

 2.Trend Analysis

This is a technique used in technical analysis that attempts to predict future stock price movements based on recently observed trend data.

3.Cash Flow Analysis 

In this technique, the net income and expenses of a company are used to determine the working capital and net requirements of the business.

4.Ratio Analysis

This method compares a particular company with its competitor in the market.

5.Horizontal Analysis 

This technique is used in the review of a company's financial statements over multiple periods. It is usually depicted as percentage growth over the same line item in the base year.