Answer to Question #269365 in Accounting for siva

Question

Discuss the steps of performing trend analysis on the financial statements of any company.

Answer 1

The analysis is carried out in order to assess the financial condition of the enterprise, as well as to constantly carry out work aimed at improving it.

Financial analysis on the financial statements of any company is conducted by the steps:

1)Vertical analysis and horizontal analysis

2)Liquidity and solvency analysis

3)Financial stability analysis

4)Analysis of operational efficiency and business activity

5)Cash flow analysis

6)Analysis of profit and profitability

7)Assessment of the probability of bankruptcy

The analysis of the financial condition of the enterprise pursues several goals:

• - identification of changes in financial condition indicators;
• - determination of factors affecting the financial condition of the enterprise;
• - assessment of quantitative and qualitative changes in financial condition;
• - assessment of the financial situation on a certain date;
• - determination of trends in financial condition

The main task of the analysis of the financial condition is to timely identify and eliminate the shortcomings of financial activities and find reserves to improve the financial condition of the enterprise and its solvency.