III-D BSBA MM

Financial Statement
Analysis and
Implication to
Management
Financial Statement Analysis
Financial Statements
Internal and External Analysis
Benefits of Financial Statement Analysis
Horizontal Analysis
Vertical Analysis
Trend Analysis
Financial
Statements
Usually includes the following:
Balance Sheets
Income Statement
Statement of Cashflow
Financial Statement Analysis
Financial statement analysis is the process of analyzing a companies financial statements for
decision making purposes. External stakeholders use it to understand the overall health of an
organization as well as to evaluate financial performance and business value.
 External
Analysis
Internal
Analysis
 TOOLS OR TECHNIQUES USED IN FINANCIAL
ANALYSIS

1. Comparative statement analysis

2. Common size statement analysis

3. Trend analysis

4. Fund flow analysis

5. Cash flow analysis

6. Cost profit value analysis

The user of financial statements have the following reasons to
analyze and interpret the financial statements analysis:

A. Investors

B. Employees
C. Lenders
D. Suppliers

E. Management
F. Customer
G. Government Services
 Benefits of Financial Statements
Analysis
Investing Decision
Lending Desicion
Corporate Governance
25

20

15

10

0
Item 1 Item 2 Item 3 Item 4 Item 5
Horizontal Analysis
is used in the review of a company's financial statements over multiple periods.
depicted as percentage growth over the same line item in the base year.
allows financial statement users to easily spot trends and growth patterns.
shows a company's growth and financial position versus competitors.
Vertical Analysis
also known as Common-Size Financial Statements
It's most often used on the Income Statements
useful comparing a company's financial statements
composition of assets, equities, income and expenses
there's key metrics we look at are
used to balanced each accounts
divide each line item by your base figure and multiple the result by 100
 TREND ANALYSIS
Trend Analysis for business
improvement Developing

Trend Analysis System Stages of

Trend Analysis
Limitations of Trend Analysis

Analyzing trends to improve business

Conducting useful Trend Analysis

Trend Analysis over several years