Answer to Question #268550 in Management for Assignment 1

Question

Discuss steps of performing trend analysis on financial statements of any company. Perform comparative analysis on balance sheet of a company and discuss your findings.

Answer 1

Trend analysis is used to evaluate an organization’s financial information over a period of time. Periods may be measured in months, quarters, or years, depending on the circumstances. The goal is to calculate and analyze the amount change and percent change from one period to the next.

The steps involved in the process of trend analysis include;

·        Articulate the purpose and context of the analysis – The nature of the analyst’s function, such as evaluating an equity or debt investment or issuing a credit rating.

·        Collect data – Financial statements, other financial data, questionnaires, and industry / economic data. Discussions with management, suppliers, customers, and competitors, Company site visit

·        Process data – Data from the previous phase

·        Analyzing and interpreting the processed data – Input data as well as processed data.

·        Develop and communicate conclusions and recommendations – Analytical results and previous reports. Institutional guidelines for published reports           

·        Follow up - Information gathered by periodically repeating above steps as necessary to determine whether changes to holdings or recommendations are necessary.