financial statement analysis research topics

Research Topics & Ideas: Finance

120+ Finance Research Topic Ideas To Fast-Track Your Project

If you’re just starting out exploring potential research topics for your finance-related dissertation, thesis or research project, you’ve come to the right place. In this post, we’ll help kickstart your research topic ideation process by providing a hearty list of finance-centric research topics and ideas.

PS – This is just the start…

We know it’s exciting to run through a list of research topics, but please keep in mind that this list is just a starting point . To develop a suitable education-related research topic, you’ll need to identify a clear and convincing research gap , and a viable plan of action to fill that gap.

If this sounds foreign to you, check out our free research topic webinar that explores how to find and refine a high-quality research topic, from scratch. Alternatively, if you’d like hands-on help, consider our 1-on-1 coaching service .

Overview: Finance Research Topics

Corporate finance topics
Investment banking topics
Private equity & VC
Asset management
Hedge funds
Financial planning & advisory
Quantitative finance
Treasury management
Financial technology (FinTech)
Commercial banking
International finance

Corporate Finance

These research topic ideas explore a breadth of issues ranging from the examination of capital structure to the exploration of financial strategies in mergers and acquisitions.

Evaluating the impact of capital structure on firm performance across different industries
Assessing the effectiveness of financial management practices in emerging markets
A comparative analysis of the cost of capital and financial structure in multinational corporations across different regulatory environments
Examining how integrating sustainability and CSR initiatives affect a corporation’s financial performance and brand reputation
Analysing how rigorous financial analysis informs strategic decisions and contributes to corporate growth
Examining the relationship between corporate governance structures and financial performance
A comparative analysis of financing strategies among mergers and acquisitions
Evaluating the importance of financial transparency and its impact on investor relations and trust
Investigating the role of financial flexibility in strategic investment decisions during economic downturns
Investigating how different dividend policies affect shareholder value and the firm’s financial performance

Investment Banking

The list below presents a series of research topics exploring the multifaceted dimensions of investment banking, with a particular focus on its evolution following the 2008 financial crisis.

Analysing the evolution and impact of regulatory frameworks in investment banking post-2008 financial crisis
Investigating the challenges and opportunities associated with cross-border M&As facilitated by investment banks.
Evaluating the role of investment banks in facilitating mergers and acquisitions in emerging markets
Analysing the transformation brought about by digital technologies in the delivery of investment banking services and its effects on efficiency and client satisfaction.
Evaluating the role of investment banks in promoting sustainable finance and the integration of Environmental, Social, and Governance (ESG) criteria in investment decisions.
Assessing the impact of technology on the efficiency and effectiveness of investment banking services
Examining the effectiveness of investment banks in pricing and marketing IPOs, and the subsequent performance of these IPOs in the stock market.
A comparative analysis of different risk management strategies employed by investment banks
Examining the relationship between investment banking fees and corporate performance
A comparative analysis of competitive strategies employed by leading investment banks and their impact on market share and profitability

Private Equity & Venture Capital (VC)

These research topic ideas are centred on venture capital and private equity investments, with a focus on their impact on technological startups, emerging technologies, and broader economic ecosystems.

Investigating the determinants of successful venture capital investments in tech startups
Analysing the trends and outcomes of venture capital funding in emerging technologies such as artificial intelligence, blockchain, or clean energy
Assessing the performance and return on investment of different exit strategies employed by venture capital firms
Assessing the impact of private equity investments on the financial performance of SMEs
Analysing the role of venture capital in fostering innovation and entrepreneurship
Evaluating the exit strategies of private equity firms: A comparative analysis
Exploring the ethical considerations in private equity and venture capital financing
Investigating how private equity ownership influences operational efficiency and overall business performance
Evaluating the effectiveness of corporate governance structures in companies backed by private equity investments
Examining how the regulatory environment in different regions affects the operations, investments and performance of private equity and venture capital firms

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Asset Management

This list includes a range of research topic ideas focused on asset management, probing into the effectiveness of various strategies, the integration of technology, and the alignment with ethical principles among other key dimensions.

Analysing the effectiveness of different asset allocation strategies in diverse economic environments
Analysing the methodologies and effectiveness of performance attribution in asset management firms
Assessing the impact of environmental, social, and governance (ESG) criteria on fund performance
Examining the role of robo-advisors in modern asset management
Evaluating how advancements in technology are reshaping portfolio management strategies within asset management firms
Evaluating the performance persistence of mutual funds and hedge funds
Investigating the long-term performance of portfolios managed with ethical or socially responsible investing principles
Investigating the behavioural biases in individual and institutional investment decisions
Examining the asset allocation strategies employed by pension funds and their impact on long-term fund performance
Assessing the operational efficiency of asset management firms and its correlation with fund performance

Hedge Funds

Here we explore research topics related to hedge fund operations and strategies, including their implications on corporate governance, financial market stability, and regulatory compliance among other critical facets.

Assessing the impact of hedge fund activism on corporate governance and financial performance
Analysing the effectiveness and implications of market-neutral strategies employed by hedge funds
Investigating how different fee structures impact the performance and investor attraction to hedge funds
Evaluating the contribution of hedge funds to financial market liquidity and the implications for market stability
Analysing the risk-return profile of hedge fund strategies during financial crises
Evaluating the influence of regulatory changes on hedge fund operations and performance
Examining the level of transparency and disclosure practices in the hedge fund industry and its impact on investor trust and regulatory compliance
Assessing the contribution of hedge funds to systemic risk in financial markets, and the effectiveness of regulatory measures in mitigating such risks
Examining the role of hedge funds in financial market stability
Investigating the determinants of hedge fund success: A comparative analysis

Financial Planning and Advisory

This list explores various research topic ideas related to financial planning, focusing on the effects of financial literacy, the adoption of digital tools, taxation policies, and the role of financial advisors.

Evaluating the impact of financial literacy on individual financial planning effectiveness
Analysing how different taxation policies influence financial planning strategies among individuals and businesses
Evaluating the effectiveness and user adoption of digital tools in modern financial planning practices
Investigating the adequacy of long-term financial planning strategies in ensuring retirement security
Assessing the role of financial education in shaping financial planning behaviour among different demographic groups
Examining the impact of psychological biases on financial planning and decision-making, and strategies to mitigate these biases
Assessing the behavioural factors influencing financial planning decisions
Examining the role of financial advisors in managing retirement savings
A comparative analysis of traditional versus robo-advisory in financial planning
Investigating the ethics of financial advisory practices

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The following list delves into research topics within the insurance sector, touching on the technological transformations, regulatory shifts, and evolving consumer behaviours among other pivotal aspects.

Analysing the impact of technology adoption on insurance pricing and risk management
Analysing the influence of Insurtech innovations on the competitive dynamics and consumer choices in insurance markets
Investigating the factors affecting consumer behaviour in insurance product selection and the role of digital channels in influencing decisions
Assessing the effect of regulatory changes on insurance product offerings
Examining the determinants of insurance penetration in emerging markets
Evaluating the operational efficiency of claims management processes in insurance companies and its impact on customer satisfaction
Examining the evolution and effectiveness of risk assessment models used in insurance underwriting and their impact on pricing and coverage
Evaluating the role of insurance in financial stability and economic development
Investigating the impact of climate change on insurance models and products
Exploring the challenges and opportunities in underwriting cyber insurance in the face of evolving cyber threats and regulations

Quantitative Finance

These topic ideas span the development of asset pricing models, evaluation of machine learning algorithms, and the exploration of ethical implications among other pivotal areas.

Developing and testing new quantitative models for asset pricing
Analysing the effectiveness and limitations of machine learning algorithms in predicting financial market movements
Assessing the effectiveness of various risk management techniques in quantitative finance
Evaluating the advancements in portfolio optimisation techniques and their impact on risk-adjusted returns
Evaluating the impact of high-frequency trading on market efficiency and stability
Investigating the influence of algorithmic trading strategies on market efficiency and liquidity
Examining the risk parity approach in asset allocation and its effectiveness in different market conditions
Examining the application of machine learning and artificial intelligence in quantitative financial analysis
Investigating the ethical implications of quantitative financial innovations
Assessing the profitability and market impact of statistical arbitrage strategies considering different market microstructures

Treasury Management

The following topic ideas explore treasury management, focusing on modernisation through technological advancements, the impact on firm liquidity, and the intertwined relationship with corporate governance among other crucial areas.

Analysing the impact of treasury management practices on firm liquidity and profitability
Analysing the role of automation in enhancing operational efficiency and strategic decision-making in treasury management
Evaluating the effectiveness of various cash management strategies in multinational corporations
Investigating the potential of blockchain technology in streamlining treasury operations and enhancing transparency
Examining the role of treasury management in mitigating financial risks
Evaluating the accuracy and effectiveness of various cash flow forecasting techniques employed in treasury management
Assessing the impact of technological advancements on treasury management operations
Examining the effectiveness of different foreign exchange risk management strategies employed by treasury managers in multinational corporations
Assessing the impact of regulatory compliance requirements on the operational and strategic aspects of treasury management
Investigating the relationship between treasury management and corporate governance

Financial Technology (FinTech)

The following research topic ideas explore the transformative potential of blockchain, the rise of open banking, and the burgeoning landscape of peer-to-peer lending among other focal areas.

Evaluating the impact of blockchain technology on financial services
Investigating the implications of open banking on consumer data privacy and financial services competition
Assessing the role of FinTech in financial inclusion in emerging markets
Analysing the role of peer-to-peer lending platforms in promoting financial inclusion and their impact on traditional banking systems
Examining the cybersecurity challenges faced by FinTech firms and the regulatory measures to ensure data protection and financial stability
Examining the regulatory challenges and opportunities in the FinTech ecosystem
Assessing the impact of artificial intelligence on the delivery of financial services, customer experience, and operational efficiency within FinTech firms
Analysing the adoption and impact of cryptocurrencies on traditional financial systems
Investigating the determinants of success for FinTech startups

Commercial Banking

These topic ideas span commercial banking, encompassing digital transformation, support for small and medium-sized enterprises (SMEs), and the evolving regulatory and competitive landscape among other key themes.

Assessing the impact of digital transformation on commercial banking services and competitiveness
Analysing the impact of digital transformation on customer experience and operational efficiency in commercial banking
Evaluating the role of commercial banks in supporting small and medium-sized enterprises (SMEs)
Investigating the effectiveness of credit risk management practices and their impact on bank profitability and financial stability
Examining the relationship between commercial banking practices and financial stability
Evaluating the implications of open banking frameworks on the competitive landscape and service innovation in commercial banking
Assessing how regulatory changes affect lending practices and risk appetite of commercial banks
Examining how commercial banks are adapting their strategies in response to competition from FinTech firms and changing consumer preferences
Analysing the impact of regulatory compliance on commercial banking operations
Investigating the determinants of customer satisfaction and loyalty in commercial banking

International Finance

The folowing research topic ideas are centred around international finance and global economic dynamics, delving into aspects like exchange rate fluctuations, international financial regulations, and the role of international financial institutions among other pivotal areas.

Analysing the determinants of exchange rate fluctuations and their impact on international trade
Analysing the influence of global trade agreements on international financial flows and foreign direct investments
Evaluating the effectiveness of international portfolio diversification strategies in mitigating risks and enhancing returns
Evaluating the role of international financial institutions in global financial stability
Investigating the role and implications of offshore financial centres on international financial stability and regulatory harmonisation
Examining the impact of global financial crises on emerging market economies
Examining the challenges and regulatory frameworks associated with cross-border banking operations
Assessing the effectiveness of international financial regulations
Investigating the challenges and opportunities of cross-border mergers and acquisitions

Choosing A Research Topic

These finance-related research topic ideas are starting points to guide your thinking. They are intentionally very broad and open-ended. By engaging with the currently literature in your field of interest, you’ll be able to narrow down your focus to a specific research gap .

When choosing a topic , you’ll need to take into account its originality, relevance, feasibility, and the resources you have at your disposal. Make sure to align your interest and expertise in the subject with your university program’s specific requirements. Always consult your academic advisor to ensure that your chosen topic not only meets the academic criteria but also provides a valuable contribution to the field.

If you need a helping hand, feel free to check out our private coaching service here.

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Financial Statement Analysis

Written by True Tamplin, BSc, CEPF®

Reviewed by subject matter experts.

Updated on June 08, 2023

Fact Checked

Why Trust Finance Strategists?

What is financial statement analysis.

Financial statement analysis is one of the most fundamental practices in financial research and analysis.

In layman’s terms, it is the process of analyzing financial statements so that decision-makers have access to the right data.

Financial statement analysis is also used to take the pulse of a business. Since statements center on a company’s key financial details, they are useful for evaluating activities.

This is essential to understanding the firm’s overall performance.

What Are Financial Statements?

According to the American Institute of Public Accounts, financial statements are prepared for the following purposes:

Presenting a periodical review or report on the progress made by the management
Dealing with the status of investments in the business and the results achieved during the period under review

Financial statements reflect a combination of recorded facts, accounting conventions, and personal judgments.

The judgments and conventions that are applied are dependent on the competence and integrity of those who make them and on their adherence to generally accepted accounting principles (GAAP) and conventions.

Public companies are forced to keep track of their financial statements in very specific ways through a balance sheet, income statement, and cash flow statement.

However, private companies often underestimate the importance of these statements because they are not required to keep track of them. It’s not that they don’t create them, but they typically don’t use them to their full benefit.

Let’s consider the following important financial documents:

Balance Sheet: Details a company’s value based on its assets , liabilities , and shareholder equity . We can learn a lot about the efficiency of a business’s operations from its short-term cash flow and accounts receivable.
Income Statement: An income statement breaks down a company’s earnings by comparing expenses and revenue . It is broken down into separate categories that businesses can use to help them identify profitable areas.
Cash Flow Statement : This report shows a company’s cash flow in terms of operational activities, financial ventures, and investments .

Tools and Techniques Used For Financial Statement Analysis

Financial statement analysis is centered on the balance sheet, income statement, and cash flow statement. It is the best way to gauge the overall health of a business.

There are several tools and techniques with which this is done, including:

Fundamental Analysis: This analytical practice is used on a company’s most basic financial levels. It shows the health of the business on a financial level and helps provide insight into the overall value.
DuPont Analysis: This tool is used to help companies prevent conclusions that are misleading. Sometimes, looking at sheer profitability doesn’t tell the whole story, so DuPont Analysis is used to create a detailed assessment.
Horizontal Analysis: Here, we compare financial ratios, a specified benchmark, and a specified line item over a specific period. This allows firms to examine changes that have been made and compare them with other behaviors.
Vertical Analysis: This financial analytical practice shows items within the financial statement as a percentage of the base figure. It’s simple, so it’s the method that most businesses prefer.

Value of Financial Statement Analysis When Analyzing and Reporting Financial Statements

Now that we’ve gone over some of the basics, let’s dive deeper into financial research and analysis. Here’s what makes financial statement analysis such a powerful tool.

Identifying the Industry’s Economic Characteristics

Financial statement analysis can identify several important factors in a business’s marketplace, sometimes finding smaller niches that are other methods miss.

We can use financial statement analysis to determine market size, compare competitors , and investigate the growth rate of a market as it relates to a variable such as spending.

It’s also possible to look beyond your own company and find out how others are faring in new markets before you decide to invest in them.

Another powerful tool that a lot of brands are using is product differentiation analysis. This method crunches financial numbers to see how well a brand’s products and prices are holding up against others in the same market.

There are several factors at play here, including distribution, purchasing, and advertising costs .

Identifying Company Strategies

All entrepreneurs understand the importance of finding the right strategy to meet the needs of their business. They spend a lot of time searching for the perfect one.

When you break it all down, the blueprint is usually the same, whether it’s developing a business plan or developing advanced strategies. That blueprint is defined by data.

The only difference between the two is that a business strategy is focused more on the future and the development of the business.

Once a strategy is established, then it has to be measured. The only true way to get accurate results is to compare financials.

Most strategies evolve, and financial analysis helps steer us in the right direction. For example, a detailed financial statement analysis will reveal the direction your company is moving. It will be the first indicator if growth is not where you want it to be.

Assessing the Quality of a Company’s Financial Statements

All businesses must have a method of efficiently analyzing their financial statements. This process requires three key points of understanding that must always be accounted for.

These can all be found through a sound financial statement analysis.

Businesses must identify the economic characteristics of their industry and compare their finances to the average.
Companies must be able to identify which strategies are profitable and which are not.
Businesses must be able to gauge the quality of their financial statements.

Inaccurate financial statements are common in small businesses. If left unchecked, this will lead down a path of ruin.

Financial research and analysis are the best way to ensure that these valuable reports are steering your growth in the right direction.

Analyzing Profitability and Identifying Potential Business Risks

Every business strategy has risks, and the majority of those risks are felt on a financial level. Therefore, it’s important for businesses to devise ways to identify and mitigate these risks.

While it’s not possible to avoid every risk, we can identify them before they cause too much damage. This is done by keeping a close eye on profitability.

Noteworthily, then, financial statement analysis helps you to keep track of profitability ratios, enabling you to truly measure the overall value of a strategy moving forward.

Preparing Financial Statement Forecasts

Forecasts are how companies predict the direction in which their business is heading. These forecasts need to be aligned with the company’s overall goals.

Income , cash flow, and balance sheets must all be closely monitored to ensure that they are aligned with the organization’s overall growth objectives.

Financial statement analysis is the practice that the world’s leading businesses engage in to stay ahead of their competitors.

Financial Statement Analysis FAQs

What is financial statement analysis.

Financial Statement Analysis is the process of analyzing a company’s financial statements and using this information to gauge its performance over time, assess its current condition, and make predictions about future performance.

Why is Financial Statement Analysis important?

Financial Statement Analysis is an essential tool for investors and financial professionals as it can help them better understand a company’s financial health and improve their decision-making processes when making investments or loan decisions.

What types of Financial Statements are analyzed?

The three main financial statements used in Financial Statement Analysis are the Balance Sheet, Income Statement, and Cash Flow statement.

What analysis techniques are used to review Financial Statements?

Common analysis techniques used in Financial Statement Analysis include trend analysis, vertical and horizontal analyses, ratio analysis, and cash flow statement analysis.

What information can be gathered through Financial Statement Analysis?

Financial Statement Analysis can provide insights into a company’s financial position, performance over time, liquidity and solvency, profitability, the efficiency of operations, and more. It can also be used to assess the quality of accounting practices and risk levels.

financial statement analysis research topics

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide , a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University , where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon , Nasdaq and Forbes .

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Financial Statement Analysis

First Online: 26 February 2020

Cite this chapter

Terence M. Yhip 3 &
Bijan M. D. Alagheband 4

1503 Accesses

This chapter provides fundamental financial analysis based on ratio analysis, a powerful tool to assess the performance of a firm over a period, or to compare risk and return of firms of different sizes. The discussion centres on the income statement, the balance sheet, the statement of shareholders’ equity, and the cash flow statement and the capitalisation of off-balance obligations. These provide the credit analyst with information to calculate the ratios, which are usually grouped into four categories: profitability, asset utilisation and efficiency, liquidity, and debt and solvency. The ratio examples are based on actual financial reports. Calculated accurately and analysed carefully, financial ratios are revealing and predictive. But financial statements can also mislead with window dressing and fraudulent reporting. The chapter provides examples.

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See Bernstein, Leopold and Wild, John (1998), Financial Statement Analysis, Theory, Application, and Interpretation , 6th edition, Irwin McGraw-Hill. Also, White, Gerald, Sondhi, Ashwinpaul, and Fried, Dov (1997), The Analysis and Use of Financial Statements, 2nd edition, John Wiley and Sons; Kimmel, Weygandt, Kieso, and Trenholm (2009), “ Financial Accounting, Tools for Business and Decision Making ”, 4th Canadian ed., John Wiley and Sons.

Fridson, Martin, and Alvarez, Fernando (2011), Financial Statement Analysis, A Practitioner’s Guide , 4th ed. John Wiley & Sons Inc. In Chap. 1 , the authors discuss “the importance of being skeptical”. This theme carries through the rest of this book, an indispensable resource for credit analysts and for first-time users of financial statements. This book looks at some of the biggest financial scandals in recent times, such as Enron, WorldCom, and Nortel Networks.

Chartered professional accountants provide three types of financial statements. (1) Audited Engagement: It provides the highest assurance that the financial statements are free of material misstatement and are fairly presented based upon the application of generally accepted accounting principles (GAAP). The assurance is supported by testing procedures performed in the compilation of the figures. (2) Review Engagement: It provides only limited or reasonable assurance on a company’s financial statements. (3) Compilation Engagement: They provide no assurance on a company’s financial statements. The accountants merely compile them in a financial statement format that complies with generally accepted accounting principles without any testing performed.

International Financial Reporting Standards (IFRS), the reporting rules for making company accounts understandable and comparable across international boundaries, are issued by the International Accounting Standards Board (IASB) of the International Accounting Standards Committee (IASC). The IASC has no authority to require international compliance, but many countries including Australia, Brazil, Canada, and the European Union have adopted the accounting standards. The financial statements of publicly traded companies in these jurisdictions are prepared in accordance with IAS. The Financial Accounting Standards Board (FASB) of the United States establishes and communicates standards of financial accounting and reporting, known as generally accepted accounting principles (GAAP). The United States has not adopted IFRS, but the FASB also requires the reporting of comprehensive income.

Arthur Andersen LLP was the public accounting firm that audited Enron Corp. The firm cofounded as Andersen, DeLany & Co. in 1913 by Arthur E. Andersen, no longer exists. On June 15, 2002, Arthur Andersen was found guilty of obstructing justice (shredding evidence) in the Enron scandal, and lost its licence to engage in public accounting.

Such data are available from various business services companies. Sources include Risk Management Association (RMA). Banks use RMA Annual Statement Studies as a standard source to evaluate businesses applying for financing. Another source is online web access to Dun & Bradstreet’s Key Business Ratios to benchmarking data. A third source is Wolters Kluwer’s Almanac of Business and Industrial Financial Ratios for 199 industries in all of North America (Canada, the United States, and Mexico).

The widely used variable reduction techniques are Principal Components Analysis and Factor Analysis. The procedures partition a smaller number of metrics from the larger multivariate data set. The result is a subset whose ratios have zero correlation with each other but are strongly correlated with the excluded ratios. The zero or low correlation ensures maximum information or explanatory power is achieved. The strong correlation ensures that the ratios of the subset capture information in the excluded ratios. Bernstein & Wild, op. cit. Lists 48 financial ratios in the front cover; and there are as many as 100 as stated in White, Sondhi, and Fried, op. cit. Page 192.

Sathye, M. V. James, and B. Raymond (2013), Credit Analysis and Lending Management, 3rd Edition, Tilde University Press. Refer to Chapter 2, page 81. The authors list ten ratios that loan officers consider important.

Herbert A. Simon coined the word satisficing by combining “satisfy” and “suffice” to explain the behaviour of decision-makers working with limited information. In such a situation, he argued that an optimal solution is indeterminate. He referred his satisficing theory of the firm as bounded rationality in contrast with unbounded rationality that underpins the classical theory, which assumes that the firm knows with certainty its demand and cost function and can therefore maximise profit. Herbert Simon received the Nobel Memorial Prize in Economics “for his pioneering research into the decision-making process within economic organizations” in 1978.

See online data prepared by Aswath Damodaran, NYU Stern School of Business, Operating and Net Margins by Industry Sector. Data of last update: January 5, 2017. http://people.stern.nyu.edu/adamodar/New_Home_Page/datacurrent.html . See also Grocery Stores Industry Profitability on CSI Market. Web site: http://csimarket.com

See Ganguin, B., J. Bilardello (2005), op. cit., page 99 where the authors examine the pros and cons of using EBITDA; and Martin Fridson & Fernando Alvarez (2011) op. cit., Chapter 8.

Refer to Aswath Damodaran, op. cit. The average for 163 global firms in the industry was 1.92% as of January 2017. Data from CSI Market show that average the Net Income margin for US firms was 2.35% in 2016 and 2.13% in 2015.

Koopmans, Tjalling C., ed. (1951), Activity Analysis of Production and Allocation. New York: Wiley. Koopmans’ notion of technical efficiency is that an input–output vector is technically efficient if, and only if, increasing any output or decreasing any input is possible only by decreasing some other output or increasing some other input.

White, Sondhi, and Fried, op. cit. on methods to adjust leverage ratios to include various off-balance sheet liabilities. In particular, this chapter shows how to capitalise operating leases. Also, Moody’s, “Guideline Rent Expense Multiples for Use with Moody’s Global Standard Adjustment to Capitalize Operating Leases”, Revised March 2006. Refer to Chapter 11.

The general formula for WACC is: $ \mathrm{WACC}=\frac{\sum_{j=1}^N\ {r}_j{V}_j}{\sum_{j=1}^N{V}_j} $ where N is the number of sources of capital, r is the required rate of return for security j , and V is the market value of all outstanding securities j . Applying the formula to two securities, equity and debt, $ \mathrm{WACC}=\frac{E}{E+D}\ {r}_e+\frac{D}{E+D}\ \left(1-t\right){r}_d $ where E is the market value of equity, D is the market value of debt, and t is the marginal tax rate.

Moody’s Investors Services (2015), Announcement: Moody’s updates its global methodology for financial statement adjustments . The methodology is provided in the publication June 2015 article, Financial Statement Adjustments in the Analysis of Non-Financial Corporations . Before the recent revision, the sector multiples ranged from 5× to 8×.

There are numerous readings on financial manipulation. The reader may wish to look up these sources: (1) Martin Fridson and Fernando Alvarez, ibid., Chapter 9, The Reliability of Disclosure and Audits; (2) Roman Weil and Michael Mahler, Handbook of Cost Management, 2nd Edition, John Wiley & Sons, 2005, Chapter 31, Section 41.4, Specific Methods to Manipulate Financial reports; (3) Al Rosen and Mark Rosen, Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports , Third Edition Hardcover, May 5, 2010.

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A | Financial Statement Analysis

Financial statement analysis.

Financial statement analysis reviews financial information found on financial statements to make informed decisions about the business. The income statement, statement of retained earnings, balance sheet, and statement of cash flows, among other financial information, can be analyzed. The information obtained from this analysis can benefit decision-making for internal and external stakeholders and can give a company valuable information on overall performance and specific areas for improvement. The analysis can help them with budgeting, deciding where to cut costs, how to increase revenues, and future capital investments opportunities.

When considering the outcomes from analysis, it is important for a company to understand that data produced needs to be compared to others within industry and close competitors. The company should also consider their past experience and how it corresponds to current and future performance expectations. Three common analysis tools are used for decision-making; horizontal analysis, vertical analysis, and financial ratios.

For our discussion of financial statement analysis, we will use Banyan Goods. Banyan Goods is a merchandising company that sells a variety of products. The image below shows the comparative income statements and balance sheets for the past two years.

Keep in mind that the comparative income statements and balance sheets for Banyan Goods are simplified for our calculations and do not fully represent all the accounts a company could maintain. Let’s begin our analysis discussion by looking at horizontal analysis.

Horizontal Analysis

Horizontal analysis (also known as trend analysis) looks at trends over time on various financial statement line items. A company will look at one period (usually a year) and compare it to another period. For example, a company may compare sales from their current year to sales from the prior year. The trending of items on these financial statements can give a company valuable information on overall performance and specific areas for improvement. It is most valuable to do horizontal analysis for information over multiple periods to see how change is occurring for each line item. If multiple periods are not used, it can be difficult to identify a trend. The year being used for comparison purposes is called the base year (usually the prior period). The year of comparison for horizontal analysis is analyzed for dollar and percent changes against the base year.

The dollar change is found by taking the dollar amount in the base year and subtracting that from the year of analysis.

Using Banyan Goods as our example, if Banyan wanted to compare net sales in the current year (year of analysis) of $120,000 to the prior year (base year) of $100,000, the dollar change would be as follows:

The percentage change is found by taking the dollar change, dividing by the base year amount, and then multiplying by 100.

Let’s compute the percentage change for Banyan Goods’ net sales.

This means Banyan Goods saw an increase of $20,000 in net sales in the current year as compared to the prior year, which was a 20% increase. The same dollar change and percentage change calculations would be used for the income statement line items as well as the balance sheet line items. The image below shows the complete horizontal analysis of the income statement and balance sheet for Banyan Goods.

Depending on their expectations, Banyan Goods could make decisions to alter operations to produce expected outcomes. For example, Banyan saw a 50% accounts receivable increase from the prior year to the current year. If they were only expecting a 20% increase, they may need to explore this line item further to determine what caused this difference and how to correct it going forward. It could possibly be that they are extending credit more readily than anticipated or not collecting as rapidly on outstanding accounts receivable. The company will need to further examine this difference before deciding on a course of action. Another method of analysis Banyan might consider before making a decision is vertical analysis.

Vertical Analysis

Vertical analysis shows a comparison of a line item within a statement to another line item within that same statement. For example, a company may compare cash to total assets in the current year. This allows a company to see what percentage of cash (the comparison line item) makes up total assets (the other line item) during the period. This is different from horizontal analysis, which compares across years. Vertical analysis compares line items within a statement in the current year. This can help a business to know how much of one item is contributing to overall operations. For example, a company may want to know how much inventory contributes to total assets. They can then use this information to make business decisions such as preparing the budget, cutting costs, increasing revenues, or capital investments.

The company will need to determine which line item they are comparing all items to within that statement and then calculate the percentage makeup. These percentages are considered common-size because they make businesses within industry comparable by taking out fluctuations for size. It is typical for an income statement to use net sales (or sales) as the comparison line item. This means net sales will be set at 100% and all other line items within the income statement will represent a percentage of net sales.

On the balance sheet, a company will typically look at two areas: (1) total assets, and (2) total liabilities and stockholders’ equity. Total assets will be set at 100% and all assets will represent a percentage of total assets. Total liabilities and stockholders’ equity will also be set at 100% and all line items within liabilities and equity will be represented as a percentage of total liabilities and stockholders’ equity. The line item set at 100% is considered the base amount and the comparison line item is considered the comparison amount. The formula to determine the common-size percentage is:

For example, if Banyan Goods set total assets as the base amount and wanted to see what percentage of total assets were made up of cash in the current year, the following calculation would occur.

Cash in the current year is $110,000 and total assets equal $250,000, giving a common-size percentage of 44%. If the company had an expected cash balance of 40% of total assets, they would be exceeding expectations. This may not be enough of a difference to make a change, but if they notice this deviates from industry standards, they may need to make adjustments, such as reducing the amount of cash on hand to reinvest in the business. The image below shows the common-size calculations on the comparative income statements and comparative balance sheets for Banyan Goods.

Even though vertical analysis is a statement comparison within the same year, Banyan can use information from the prior year’s vertical analysis to make sure the business is operating as expected. For example, unearned revenues increased from the prior year to the current year and made up a larger portion of total liabilities and stockholders’ equity. This could be due to many factors, and Banyan Goods will need to examine this further to see why this change has occurred. Let’s turn to financial statement analysis using financial ratios.

Overview of Financial Ratios

Financial ratios help both internal and external users of information make informed decisions about a company. A stakeholder could be looking to invest, become a supplier, make a loan, or alter internal operations, among other things, based in part on the outcomes of ratio analysis. The information resulting from ratio analysis can be used to examine trends in performance, establish benchmarks for success, set budget expectations, and compare industry competitors. There are four main categories of ratios: liquidity, solvency, efficiency, and profitability. Note that while there are more ideal outcomes for some ratios, the industry in which the business operates can change the influence each of these outcomes has over stakeholder decisions. (You will learn more about ratios, industry standards, and ratio interpretation in advanced accounting courses.)

Liquidity Ratios

Liquidity ratios show the ability of the company to pay short-term obligations if they came due immediately with assets that can be quickly converted to cash. This is done by comparing current assets to current liabilities. Lenders, for example, may consider the outcomes of liquidity ratios when deciding whether to extend a loan to a company. A company would like to be liquid enough to manage any currently due obligations but not too liquid where they may not be effectively investing in growth opportunities. Three common liquidity measurements are working capital, current ratio, and quick ratio.

Working Capital

Working capital measures the financial health of an organization in the short-term by finding the difference between current assets and current liabilities. A company will need enough current assets to cover current liabilities; otherwise, they may not be able to continue operations in the future. Before a lender extends credit, they will review the working capital of the company to see if the company can meet their obligations. A larger difference signals that a company can cover their short-term debts and a lender may be more willing to extend the loan. On the other hand, too large of a difference may indicate that the company may not be correctly using their assets to grow the business. The formula for working capital is:

Using Banyan Goods, working capital is computed as follows for the current year:

In this case, current assets were $200,000, and current liabilities were $100,000. Current assets were far greater than current liabilities for Banyan Goods and they would easily be able to cover short-term debt.

The dollar value of the difference for working capital is limited given company size and scope. It is most useful to convert this information to a ratio to determine the company’s current financial health. This ratio is the current ratio.

Current Ratio

Working capital expressed as a ratio is the current ratio. The current ratio considers the amount of current assets available to cover current liabilities. The higher the current ratio, the more likely the company can cover its short-term debt. The formula for current ratio is:

The current ratio in the current year for Banyan Goods is:

A 2:1 ratio means the company has twice as many current assets as current liabilities; typically, this would be plenty to cover obligations. This may be an acceptable ratio for Banyan Goods, but if it is too high, they may want to consider using those assets in a different way to grow the company.

Quick Ratio

The quick ratio, also known as the acid-test ratio, is similar to the current ratio except current assets are more narrowly defined as the most liquid assets, which exclude inventory and prepaid expenses. The conversion of inventory and prepaid expenses to cash can sometimes take more time than the liquidation of other current assets. A company will want to know what they have on hand and can use quickly if an immediate obligation is due. The formula for the quick ratio is:

The quick ratio for Banyan Goods in the current year is:

A 1.6:1 ratio means the company has enough quick assets to cover current liabilities.

Another category of financial measurement uses solvency ratios.

Solvency Ratios

Solvency implies that a company can meet its long-term obligations and will likely stay in business in the future. To stay in business the company must generate more revenue than debt in the long-term. Meeting long-term obligations includes the ability to pay any interest incurred on long-term debt. Two main solvency ratios are the debt-to-equity ratio and the times interest earned ratio.

Debt to Equity Ratio

The debt-to-equity ratio shows the relationship between debt and equity as it relates to business financing. A company can take out loans, issue stock, and retain earnings to be used in future periods to keep operations running. It is less risky and less costly to use equity sources for financing as compared to debt resources. This is mainly due to interest expense repayment that a loan carries as opposed to equity, which does not have this requirement. Therefore, a company wants to know how much debt and equity contribute to its financing. Ideally, a company would prefer more equity than debt financing. The formula for the debt to equity ratio is:

The information needed to compute the debt-to-equity ratio for Banyan Goods in the current year can be found on the balance sheet.

This means that for every $1 of equity contributed toward financing, $1.50 is contributed from lenders. This would be a concern for Banyan Goods. This could be a red flag for potential investors that the company could be trending toward insolvency. Banyan Goods might want to get the ratio below 1:1 to improve their long-term business viability.

Times Interest Earned Ratio

Time interest earned measures the company’s ability to pay interest expense on long-term debt incurred. This ability to pay is determined by the available earnings before interest and taxes (EBIT) are deducted. These earnings are considered the operating income. Lenders will pay attention to this ratio before extending credit. The more times over a company can cover interest, the more likely a lender will extend long-term credit. The formula for times interest earned is:

The information needed to compute times interest earned for Banyan Goods in the current year can be found on the income statement.

The $43,000 is the operating income, representing earnings before interest and taxes. The 21.5 times outcome suggests that Banyan Goods can easily repay interest on an outstanding loan and creditors would have little risk that Banyan Goods would be unable to pay.

Another category of financial measurement uses efficiency ratios.

Efficiency Ratios

Efficiency shows how well a company uses and manages their assets. Areas of importance with efficiency are management of sales, accounts receivable, and inventory. A company that is efficient typically will be able to generate revenues quickly using the assets it acquires. Let’s examine four efficiency ratios: accounts receivable turnover, total asset turnover, inventory turnover, and days’ sales in inventory.

Accounts Receivable Turnover

Accounts receivable turnover measures how many times in a period (usually a year) a company will collect cash from accounts receivable. A higher number of times could mean cash is collected more quickly and that credit customers are of high quality. A higher number is usually preferable because the cash collected can be reinvested in the business at a quicker rate. A lower number of times could mean cash is collected slowly on these accounts and customers may not be properly qualified to accept the debt. The formula for accounts receivable turnover is:

Many companies do not split credit and cash sales, in which case net sales would be used to compute accounts receivable turnover. Average accounts receivable is found by dividing the sum of beginning and ending accounts receivable balances found on the balance sheet. The beginning accounts receivable balance in the current year is taken from the ending accounts receivable balance in the prior year.

When computing the accounts receivable turnover for Banyan Goods, let’s assume net credit sales make up $100,000 of the $120,000 of the net sales found on the income statement in the current year.

An accounts receivable turnover of four times per year may be low for Banyan Goods. Given this outcome, they may want to consider stricter credit lending practices to make sure credit customers are of a higher quality. They may also need to be more aggressive with collecting any outstanding accounts.

Total Asset Turnover

Total asset turnover measures the ability of a company to use their assets to generate revenues. A company would like to use as few assets as possible to generate the most net sales. Therefore, a higher total asset turnover means the company is using their assets very efficiently to produce net sales. The formula for total asset turnover is:

Average total assets are found by dividing the sum of beginning and ending total assets balances found on the balance sheet. The beginning total assets balance in the current year is taken from the ending total assets balance in the prior year.

Banyan Goods’ total asset turnover is:

The outcome of 0.53 means that for every $1 of assets, $0.53 of net sales are generated. Over time, Banyan Goods would like to see this turnover ratio increase.

Inventory Turnover

Inventory turnover measures how many times during the year a company has sold and replaced inventory. This can tell a company how well inventory is managed. A higher ratio is preferable; however, an extremely high turnover may mean that the company does not have enough inventory available to meet demand. A low turnover may mean the company has too much supply of inventory on hand. The formula for inventory turnover is:

Cost of goods sold for the current year is found on the income statement. Average inventory is found by dividing the sum of beginning and ending inventory balances found on the balance sheet. The beginning inventory balance in the current year is taken from the ending inventory balance in the prior year.

Banyan Goods’ inventory turnover is:

1.6 times is a very low turnover rate for Banyan Goods. This may mean the company is maintaining too high an inventory supply to meet a low demand from customers. They may want to decrease their on-hand inventory to free up more liquid assets to use in other ways.

Days’ Sales in Inventory

Days’ sales in inventory expresses the number of days it takes a company to turn inventory into sales. This assumes that no new purchase of inventory occurred within that time period. The fewer the number of days, the more quickly the company can sell its inventory. The higher the number of days, the longer it takes to sell its inventory. The formula for days’ sales in inventory is:

Banyan Goods’ days’ sales in inventory is:

243 days is a long time to sell inventory. While industry dictates what is an acceptable number of days to sell inventory, 243 days is unsustainable long-term. Banyan Goods will need to better manage their inventory and sales strategies to move inventory more quickly.

The last category of financial measurement examines profitability ratios.

Profitability Ratios

Profitability considers how well a company produces returns given their operational performance. The company needs to leverage its operations to increase profit. To assist with profit goal attainment, company revenues need to outweigh expenses. Let’s consider three profitability measurements and ratios: profit margin, return on total assets, and return on equity.

Profit Margin

Profit margin represents how much of sales revenue has translated into income. This ratio shows how much of each $1 of sales is returned as profit. The larger the ratio figure (the closer it gets to 1), the more of each sales dollar is returned as profit. The portion of the sales dollar not returned as profit goes toward expenses. The formula for profit margin is:

For Banyan Goods, the profit margin in the current year is:

This means that for every dollar of sales, $0.29 returns as profit. If Banyan Goods thinks this is too low, the company would try and find ways to reduce expenses and increase sales.

Return on Total Assets

The return on total assets measures the company’s ability to use its assets successfully to generate a profit. The higher the return (ratio outcome), the more profit is created from asset use. Average total assets are found by dividing the sum of beginning and ending total assets balances found on the balance sheet. The beginning total assets balance in the current year is taken from the ending total assets balance in the prior year. The formula for return on total assets is:

For Banyan Goods, the return on total assets for the current year is:

The higher the figure, the better the company is using its assets to create a profit. Industry standards can dictate what is an acceptable return.

Return on Equity

Return on equity measures the company’s ability to use its invested capital to generate income. The invested capital comes from stockholders investments in the company’s stock and its retained earnings and is leveraged to create profit. The higher the return, the better the company is doing at using its investments to yield a profit. The formula for return on equity is:

Average stockholders’ equity is found by dividing the sum of beginning and ending stockholders’ equity balances found on the balance sheet. The beginning stockholders’ equity balance in the current year is taken from the ending stockholders’ equity balance in the prior year. Keep in mind that the net income is calculated after preferred dividends have been paid.

For Banyan Goods, we will use the net income figure and assume no preferred dividends have been paid. The return on equity for the current year is:

The higher the figure, the better the company is using its investments to create a profit. Industry standards can dictate what is an acceptable return.

Advantages and Disadvantages of Financial Statement Analysis

There are several advantages and disadvantages to financial statement analysis. Financial statement analysis can show trends over time, which can be helpful in making future business decisions. Converting information to percentages or ratios eliminates some of the disparity between competitor sizes and operating abilities, making it easier for stakeholders to make informed decisions. It can assist with understanding the makeup of current operations within the business, and which shifts need to occur internally to increase productivity.

A stakeholder needs to keep in mind that past performance does not always dictate future performance. Attention must be given to possible economic influences that could skew the numbers being analyzed, such as inflation or a recession. Additionally, the way a company reports information within accounts may change over time. For example, where and when certain transactions are recorded may shift, which may not be readily evident in the financial statements.

A company that wants to budget properly, control costs, increase revenues, and make long-term expenditure decisions may want to use financial statement analysis to guide future operations. As long as the company understands the limitations of the information provided, financial statement analysis is a good tool to predict growth and company financial strength.

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Introduction to Financial Analysis

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Kenneth S. Bigel, New York City, New York

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Language: English

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About the Author
Author's Acknowledgements
Open Touro Acknowledgements
Chapter 1: Introduction
Chapter 2: Financial Statement Analysis: The Balance Sheet
Chapter 3: Financial Statements Analysis: The Income Statement
Chapter 4: Financial Statements and Finance
Chapter 5: Financial Ratios and Forecasting; Liquidity and Solvency Ratios
Chapter 6: Profitability and Return Ratios, and Turnover
Chapter 7: Market Ratios
Chapter 8: Cash Flow, Depreciation, and Financial Projections
Chapter 9: Corporate Forecasting Models
Chapter 10: The Time Value of Money: Simple Present- and Future-Values
Chapter 11: The Time Value of Money: Annuities, Perpetuities, and Mortgages
Chapter 12: Fixed Income Valuation
Chapter 13: Interest Rates
Chapter 14: Equity Valuation and Return Measurement

Ancillary Material

About the book.

This Open Textbook is a dynamic guide incorporating the essential skills needed to build a foundation in Financial Analysis . Students and readers will learn how to insightfully read a Financial Statement, utilize key financial ratios in order to derive forward-looking investment-related inferences from the accounting data, engage in elementary forecasting and modeling, master the theory of the Time Value of Money , and learn to price stocks and bonds in an environment in which interest rates constantly change. Ample problems and solutions, and review questions are provided to the student so that s/he can gauge his/her progress. This text will be continually updated in order to provide novel information and enhance students’ experiences.

About the Contributors

Dr. Bigel was formerly a fixed income analyst in the International Banking Department of the Bankers Trust Company (now DeutscheBank), analyzing international wholesale loans and debt instruments, and a graduate of its Institutional Credit Training Program. He later was affiliated with the Ford Motor Company, conducting investment analysis and planned car profits analysis, annual budgeting, and strategic planning. Subsequently, he worked as a senior portfolio manager attached to the wealth management division of Prudential Securities. He was formerly registered under Series 3, 7, 15, 24, 63, and 65.

As an independent consultant, he was involved in numerous high-profile cases including Enron. Dr. Bigel has conducted executive education programs for Morgan Stanley Capital Markets, Merrill Lynch Capital Markets, UBS, Lehman Brothers, CIBC, G.X. Clarke & Co. (now part of Goldman Sachs), and China CITIC Bank. He currently serves on the Financial Industry Regulatory Association’s Board of Arbitrators.

His extensive published research relates to Financial Ethics and Moral Development, Behavioral Finance, and Political Economy. He has been teaching college and graduate level finance courses since 1989.

Dr. Bigel has been interviewed on American radio, was a visiting scholar at Sichuan University and at Xi’an Jiaotong University in China, and appeared on Chinese television. At Touro University, he is a member of the Faculty Senate, The Touro Academy of Leadership and Management, The Assessments Committee, and The Promotions Committee. He chairs the Integrity Committee at LCM.

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Educational Background:

Ph.D., (high honors) New York University, Steinhardt School of Culture, Education, and Human Development (Business Education and Financial Ethics)
M.B.A., New York University, Stern School of Business (Finance)
B.A. (honors), Brooklyn College of the City University of New York (Philosophy and Mathematics)
CFP™, International Board of Standards and Practices for Certified Financial Planners
Hebrew University of Jerusalem (one-year program)

Dr. Bigel welcomes questions and constructive suggestions. He can be reached at <[email protected]>.

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What Is Financial Analysis?

Understanding financial analysis, corporate financial analysis, investment financial analysis, types of financial analysis, horizontal vs. vertical analysis.

Example of Financial Analysis
Financial Analysis FAQs

The Bottom Line

Corporate Finance
Financial statements: Balance, income, cash flow, and equity

Financial Analysis: Definition, Importance, Types, and Examples

Financial analysis is the process of evaluating businesses, projects, budgets, and other finance-related transactions to determine their performance and suitability. Typically, financial analysis is used to analyze whether an entity is stable, solvent , liquid , or profitable enough to warrant a monetary investment.

Key Takeaways

If conducted internally, financial analysis can help fund managers make future business decisions or review historical trends for past successes.
If conducted externally, financial analysis can help investors choose the best possible investment opportunities.
Fundamental analysis and technical analysis are the two main types of financial analysis.
Fundamental analysis uses ratios and financial statement data to determine the intrinsic value of a security.
Technical analysis assumes a security's value is already determined by its price, and it focuses instead on trends in value over time.

Investopedia / Nez Riaz

Financial analysis is used to evaluate economic trends, set financial policy, build long-term plans for business activity, and identify projects or companies for investment. This is done through the synthesis of financial numbers and data. A financial analyst will thoroughly examine a company's financial statements —the income statement , balance sheet , and cash flow statement . Financial analysis can be conducted in both corporate finance and investment finance settings.

For example, return on assets (ROA) is a common ratio used to determine how efficient a company is at using its assets and as a measure of profitability. This ratio could be calculated for several companies in the same industry and compared to one another as part of a larger analysis.

There is no single best financial analytic ratio or calculation. Most often, analysts use a combination of data to arrive at their conclusion.

In corporate finance, the analysis is conducted internally by the accounting department and shared with management in order to improve business decision making. This type of internal analysis may include ratios such as net present value (NPV) and internal rate of return (IRR) to find projects worth executing.

Many companies extend credit to their customers. As a result, the cash receipt from sales may be delayed for a period of time. For companies with large receivable balances, it is useful to track days sales outstanding (DSO), which helps the company identify the length of time it takes to turn a credit sale into cash. The average collection period is an important aspect of a company's overall cash conversion cycle .

A key area of corporate financial analysis involves extrapolating a company's past performance, such as net earnings or profit margin , into an estimate of the company's future performance. This type of historical trend analysis is beneficial to identify seasonal trends.

For example, retailers may see a drastic upswing in sales in the few months leading up to Christmas. This allows the business to forecast budgets and make decisions, such as necessary minimum inventory levels, based on past trends.

In investment finance, an analyst external to the company conducts an analysis for investment purposes. Analysts can either conduct a top-down or bottom-up investment approach. A top-down approach first looks for macroeconomic opportunities, such as high-performing sectors, and then drills down to find the best companies within that sector. From this point, they further analyze the stocks of specific companies to choose potentially successful ones as investments by looking last at a particular company's fundamentals .

A bottom-up approach, on the other hand, looks at a specific company and conducts a similar ratio analysis to the ones used in corporate financial analysis, looking at past performance and expected future performance as investment indicators. Bottom-up investing forces investors to consider microeconomic factors first and foremost. These factors include a company's overall financial health, analysis of financial statements, the products and services offered, supply and demand, and other individual indicators of corporate performance over time.

Financial analysis is only useful as a comparative tool. Calculating a single instance of data is usually worthless; comparing that data against prior periods, other general ledger accounts, or competitor financial information yields useful information.

There are two types of financial analysis: fundamental analysis and technical analysis .

Fundamental Analysis

Fundamental analysis uses ratios gathered from data within the financial statements, such as a company's earnings per share (EPS), in order to determine the business's value. Using ratio analysis in addition to a thorough review of economic and financial situations surrounding the company, the analyst is able to arrive at an intrinsic value for the security. The end goal is to arrive at a number that an investor can compare with a security's current price in order to see whether the security is undervalued or overvalued.

Technical Analysis

Technical analysis uses statistical trends gathered from trading activity, such as moving averages (MA). Essentially, technical analysis assumes that a security’s price already reflects all publicly available information and instead focuses on the statistical analysis of price movements . Technical analysis attempts to understand the market sentiment behind price trends by looking for patterns and trends rather than analyzing a security’s fundamental attributes.

When reviewing a company's financial statements, two common types of financial analysis are horizontal analysis and vertical analysis . Both use the same set of data, though each analytical approach is different.

Horizontal analysis entails selecting several years of comparable financial data. One year is selected as the baseline, often the oldest. Then, each account for each subsequent year is compared to this baseline, creating a percentage that easily identifies which accounts are growing (hopefully revenue) and which accounts are shrinking (hopefully expenses).

Vertical analysis entails choosing a specific line item benchmark, then seeing how every other component on a financial statement compares to that benchmark. Most often, net sales is used as the benchmark. A company would then compare cost of goods sold, gross profit, operating profit, or net income as a percentage to this benchmark. Companies can then track how the percent changes over time.

Examples of Financial Analysis

In the nine-month period ending Sept. 30, 2022, Amazon.com reported a net loss of $3 billion. This was a substantial decline from one year ago where the company reported net income of over $19 billion.

Financial analysis shows some interesting facets of the company's earnings per share (shown above. On one hand, the company's EPS through the first three quarters was -$0.29; compared to the prior year, Amazon earned $1.88 per share. This dramatic difference was not present looking only at the third quarter of 2022 compared to 2021. Though EPS did decline from one year to the next, the company's EPS for each third quarter was comparable ($0.31 per share vs. $0.28 per share).

Analysts can also use the information above to perform corporate financial analysis. For example, consider Amazon's operating profit margins below.

2022: $9,511 / $364,779 = 2.6%
2021: $21,419 / $332,410 = 6.4%

From Q3 2021 to Q3 2022, the company experienced a decline in operating margin, allowing for financial analysis to reveal that the company simply earns less operating income for every dollar of sales.

Why Is Financial Analysis Useful?

The financial analysis aims to analyze whether an entity is stable , liquid, solvent, or profitable enough to warrant a monetary investment. It is used to evaluate economic trends, set financial policies, build long-term plans for business activity, and identify projects or companies for investment.

How Is Financial Analysis Done?

Financial analysis can be conducted in both corporate finance and investment finance settings. A financial analyst will thoroughly examine a company's financial statements—the income statement, balance sheet, and cash flow statement.

One of the most common ways to analyze financial data is to calculate ratios from the data in the financial statements to compare against those of other companies or against the company's own historical performance. A key area of corporate financial analysis involves extrapolating a company's past performance, such as net earnings or profit margin, into an estimate of the company's future performance.

What Techniques Are Used in Conducting Financial Analysis?

Analysts can use vertical analysis to compare each component of a financial statement as a percentage of a baseline (such as each component as a percentage of total sales). Alternatively, analysts can perform horizontal analysis by comparing one baseline year's financial results to other years.

Many financial analysis techniques involve analyzing growth rates including regression analysis, year-over-year growth, top-down analysis such as market share percentage, or bottom-up analysis such as revenue driver analysis .

Last, financial analysis often entails the use of financial metrics and ratios. These techniques include quotients relating to the liquidity, solvency, profitability, or efficiency (turnover of resources) of a company.

What Is Fundamental Analysis?

What Is Technical Analysis?

Technical analysis uses statistical trends gathered from market activity, such as moving averages (MA). Essentially, technical analysis assumes that a security’s price already reflects all publicly available information and instead focuses on the statistical analysis of price movements. Technical analysis attempts to understand the market sentiment behind price trends by looking for patterns and trends rather than analyzing a security’s fundamental attributes.

Financial analysis is a cornerstone of making smarter, more strategic decisions based on the underlying financial data of a company. Whether corporate, investment, or technical analysis, analysts use data to explore trends, understand growth, seek areas of risk, and support decision-making. Financial analysis may include investigating financial statement changes, calculating financial ratios, or exploring operating variances.

Amazon. " Amazon.com Announces Third Quarter Results ."

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Financial Statement Analysis: The Basics for Non-Accountants

15 Aug 2019

What is one thing that creditors, investors, management, and regulatory authorities all have in common? In order to do their job well, all of them rely in one way or another on financial statement analysis.

Creditors rely on financial statements to evaluate whether a company or organization will be able to pay back a debt. Regulatory authorities, like the US Securities and Exchange Commission (SEC), rely on financial statements to determine whether a company meets the accounting standards required of a publicly traded company. Investors rely on financial statements in order to understand whether investing in a company would be profitable. And management relies on financial statements to make intelligent business decisions and communicate with investors and key stakeholders.

“Accounting is the language of business , and a company’s financial statements are its way of communicating accounting information to its owners and the taxing government,” says Thomas R. Ittelson, author of Financial Statement: A Step-by-Step Guide to Understanding and Creating Financial Reports and Visual Guide to Financial Statements: Overview for Non-Financial Managers & Investors . “This includes sales, costs, expenses, profits, and assets.”

Simply put, the business world could not exist in its current form without financial statements.

But what is financial statement analysis? What are the most common types of financial statements? And how do you conduct an analysis? Learn more about this fundamental business skill below.

What is Financial Statement Analysis?

Financial statement analysis is the process an individual goes through to analyze a company’s various financial documents in order to make an informed decision about that business.

While the specific data contained within each financial statement will vary from company to company, each of these documents is designed to offer insight into the health of the company. They are also essential to monitoring a company’s performance over time, as well as understanding how a company is progressing toward key strategic initiatives.

At its heart, says Ittelson, financial statement analysis allows an individual to “watch where the money, goods, and services go.”

Related: Finance vs. Accounting: What's the Difference?

Common Types of Financial Statements

Companies will often produce a number of financial statements, each of which is tailored to the needs of a particular audience. The information contained in each of these documents will vary by necessity.

The most common types of financial statements that you may encounter include: Balance sheets, income statements, cash flow statements, and statements of shareholder equity.

1. Balance Sheets

A balance sheet is designed to communicate the “book value” of a company. It’s a simple accounting of all of the company’s assets, liabilities, and shareholders’ equity, and offers analysts a quick snapshot of how a company is performing and expects to perform.

Most balance sheets follow this basic formula:

Assets = Liabilities + Shareholders’ Equity

An asset is anything the company owns which has a quantifiable value. This may include physical property (vehicles, real estate, unsold inventory, etc.), as well as non-physical property (patents, trademarks, etc.).

Liabilities refer to money the company owes to a debtor. This may include outstanding payroll expenses, debt payments, rent and utility payments, money owed to suppliers, taxes, bonds payable, and more.

Shareholders’ equity is a term that generally refers to the net worth of a company. It reflects the amount of money that would be left if all assets were sold and all liabilities paid. This money belongs to the shareholders, whether they are a private owner or public investors.

2. Income Statements

An income statement is a report that a company generates in order to communicate how much money it has earned over a period of time. They’re often found as quarterly and annual reports.

In addition to communicating top-line revenue, income statements detail a number of other metrics that can be helpful to analysts and investors. These include:

Operating expenses, which detail every expense the company encountered during the reporting period
Depreciation, which quantifies the extent to which a company’s assets (for example, aging equipment or vehicles) have lost value over time
Net income, which subtracts the company’s expenses from its gross revenue in order to determine its total level of profits or loss
Earnings per share (EPS), which divides net income by the total number of outstanding shares

3. Cash Flow Statement

A cash flow statement is a report that details how a company receives and spends its cash. These are also called cash inflows and outflows.

A company can only operate as long as it has the money to cover its expenses. Cash flow reflects a company’s ability to operate in both the short- and the long-term, and is used by investors, creditors, and regulators to determine whether a company is in good financial standing.

Cash flow statements are typically split into three sections:

Operating activities, which details cash flow generated from the company delivering upon its goods or services, including both revenue and expenses
Investing activities, which details cash flow generated from the buying or selling of assets, such as real estate, vehicles, and equipment (using free cash and not debt)
Financing activities, which details cash flow from both debt and equity financing

4. Statement of Shareholders’ Equity

The statement of shareholders’ equity is a financial statement that details changes in the equity held by shareholders, whether those shareholders be public or private investors.

A statement of shareholders’ equity will typically report changes in the number of shares and value of common and preferred stock , as well as details about whether or not the company has purchased back any stock previously held by shareholders (called treasury stock ) and other data points.

5. Management’s Discussion and Analysis (MD&A)

The MD&A is a document written by the company’s management, which is designed to accompany financial reports.

While it is not a financial document in and of itself, an MD&A will typically provide additional context about why the company performed the way that it did during the reporting period, which can be incredibly helpful to investors, analysts, and creditors.

According to the SEC , “The purpose of MD&A is to provide investors with information that the company’s management believes to be necessary to an understanding of its financial condition, changes in financial condition and results of operations. It is intended to help investors to see the company through the eyes of management.”

While an MD&A should always be taken with a grain of salt, the Sarbanes-Oxley Act of 2002 mandates that senior corporate officers personally certify in writing that the company's financial statements comply with SEC disclosure requirements and fairly present, in all material aspects, the operations and financial condition of the issuer.

“Officers who sign off on financial statements that they know to be inaccurate will go to jail (if and when caught),” Ittelson says.

How to Conduct Financial Statement Analysis

Typically, professionals will follow one of two common methods to analyze a company’s financial statements: Vertical and horizontal analysis, and ratio analysis.

Vertical and Horizontal Analysis

Vertical and horizontal analysis are two related, but different, techniques used to analyze financial statements. They each refer to the way in which a financial statement is read, and the comparisons that an analyst can draw from that reading. Both types of analysis are critical to gaining an accurate understanding of the information provided in a financial statement.

Vertical analysis is the process of reading down a single column in a financial statement. Whereas horizontal analysis is used to identify trends over time, vertical analysis is used to determine how individual line items in a statement relate to another item in the report. For example, in an income statement, each line item might be listed as a percentage of gross sales.

Horizontal analysis, on the other hand, refers to the process of reading current financial data in comparison to previous reporting periods. Also called “trend analysis,” reading a financial statement in this way allows an individual to see how different financial metrics have changed over time: For example, whether liabilities have increased or decreased from Q1 to Q2.

Ratio Analysis

Ratio analysis is the process of analyzing the information in a financial report as it relates to another piece of information in the same report.

There are many different kinds of ratios which can help you gain insight into the health of a company. These are generally broken into the following broad categories:

Profitability Ratios: These ratios offer insight into how profitable a company is. Some important profitability ratios include gross profit ratio, return on equity, break-even point, return on equity, and return on net assets.
Liquidity Ratios: Liquidity ratios offer insight into how liquid a company is, which is important in measuring a company’s ability to stay in business. Some important liquidity ratios include cash coverage ratio, current ratio, and liquidity index.
Leverage Ratios: Leverage ratios offer insight into how much a company is dependent on debt to maintain its operations. Some important leverage ratios include debt to equity ratio, debt service coverage ratio, and fixed charge coverage.
Activity Ratios: Activity ratios offer insight into how well a company is utilizing resources. Some important activity ratios include accounts payable turnover rate, accounts receivable turnover rate, inventory turnover rate, and working capital turnover rate.

Once you have calculated a ratio for the current period, you can compare it against previous periods to understand how the company is performing over time. It’s also possible to compare the ratio against industry standards to understand if the company in question is under- or over-performing.

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Learning the Skills You Need for Success

If you want to learn how to perform financial statement analysis, either for your own interest or to better perform the duties of your job, a number of options can help you gain the skills you need.

You could pursue a self-taught route, reviewing publicly available financial statements in order to familiarize yourself with the way that financial data is typically presented. Paired with mentorship opportunities at your organization, this can be a great way of learning the basics, but it isn’t your only option.

Taking an online class focused on finance or financial accounting are other potential paths you can take to gain the skills you need.

Do you want to take your career to the next level? Download our free Guide to Advancing Your Career with Essential Business Skills to learn how enhancing your business knowledge can help you make an impact on your organization and be competitive in the job market.

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Please note you do not have access to teaching notes, financial statement analysis: a review and current issues.

China Finance Review International

ISSN : 2044-1398

Article publication date: 7 December 2021

Issue publication date: 1 February 2022

The literature on financial statement analysis attempts to improve fundamental analysis and to identify market inefficiencies with respect to financial statement information.

Design/methodology/approach

In this paper, the author reviews the extant research on financial statement analysis.

The author then provides some preliminary evidence using Chinese data and offer suggestions for future research, with a focus on utilising unique features of the Chinese business environment as motivation.

Originality/value

The author notes that there has been no work that the author could locate specifically on Chinese FSA research. The unique business environment in China, relative to the US where the vast majority of this work has been conducted, should motivate any studies, especially given the author documents the robust finding in terms of the mean reversion in profitability.

Financial statement analysis
Fundamental analysis
Forecasting
Persistence
Mean reversion

Jackson, A.B. (2022), "Financial statement analysis: a review and current issues", China Finance Review International , Vol. 12 No. 1, pp. 1-19. https://doi.org/10.1108/CFRI-10-2021-0208

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Financial Statement Analysis with Large Language Models

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What is Financial Analysis? Types & Examples

It’s calculated by dividing your company’s revenue by its total assets. In general, asset turnover ratios in the range of 0.5 to 2.0 are considered typical for most industries. A credit analyst reviews the financial statements of a customer to see if it qualifies for trade credit, rather than paying in cash for goods delivered to it.

Rates of Return Analysis

Comparing financial ratios with that of major competitors is done to identify whether a company is performing better or worse than the industry average. For example, comparing the return on assets between companies helps an analyst or investor to determine which company is making the most efficient use of its who is the lessor and who is the lessee assets. A company’s financial ratios are compared directly to those of major competitors. This side-by-side comparison reveals how the company is positioned in areas like profitability, leverage, liquidity, and asset efficiency. Comparing to competitors helps contextualize a company’s own ratio results.

Profitability Financial Ratios

Ratio analysis can expose trends that managers may use to take corrective actions. Day-sales outstanding is also known as the average collection period. You should do this every month to watch for important changes in your ratios. If you want professional feedback, you can consider hiring a certified public accountant (CPA) or chief financial officer (CFO) consultant to interpret the figures for you. The articles and research support materials available on this site are educational and are not intended to be investment or tax advice. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

What are 5 key financial ratios?

Profitability ratios like return on assets help assess how efficiently the company is generating profits from its assets. Management will compare current ratios to past periods, competitor benchmarks, and industry standards to gauge the company’s financial standing and adaptation abilities. Financial ratios are mathematical calculations used to analyze a company’s financial statements. Financial ratios provide insights into performance by comparing values over time and against industry benchmarks. The key categories of financial ratios are liquidity ratios, solvency ratios, efficiency ratios, profitability ratios, and valuation ratios.

Ratio Analysis Over Time

This means for every Rs.1 in assets, XYZ Company generated Rs.2 in revenue. A higher ratio indicates assets are being optimally employed to drive sales. The Ratio assesses how productive a company’s assets are and how capital-intensive its operations are. It helps investors determine management’s effectiveness in using assets to generate revenues.

The Income Statement for Financial Ratio Analysis

This ratio can present better insight into the short-term liquidity of the firm because of the exclusion of inventory. For example, return on assets (ROA) is a common ratio used to determine how efficient a company is at using its assets and as a measure of profitability. This ratio could be calculated for several companies in the same industry and compared to one another as part of a larger analysis. There are three debt management ratios that help a business owner evaluate the company in light of its asset base and earning power.

ROCE helps determine how profitably a company utilizes its capital and compares profitability between companies. ROCE helps determine how profitably a company uses its capital and compares profitability between companies. A company can perform ratio analysis over time to get a better understanding of the trajectory of its company.

For example, management monitors liquidity ratios like the current Ratio to ensure the company has sufficient resources to meet short-term obligations.
They use the data to determine if a company’s financial health is on an upward or downward trend and to draw comparisons to other competing firms.
When using this ratio to analyze a company, it can help to look at both the company growth phase and the industry as a whole.
It is essential for investors, lenders, and creditors to assess the company’s ability to pay back loans or to invest in the company.
Improving profitability, liquidity, and leverage ratios indicate effective financial management.

Covenants form part of the loan’s terms and conditions and companies must maintain certain metrics or the loan may be recalled. The question of which tool to use in a particular situation depends upon the skill, training, knowledge, and expertise of the analyst. When figures are incorrect (e.g., value of closing stock is overstated), ratios will give misleading results. Market prospects analysis is generally only undertaken for publicly traded companies. It is generally used to determine the likely prospects of different investment options.

Return on capital employed (ROCE) measures a company’s profitability and how efficiently it uses capital to generate income. First, ratio analysis can be performed to track changes to a company over time to better understand the trajectory of operations. Second, ratio analysis can be performed to compare results with other similar companies to see how the company is doing compared to competitors. Third, ratio analysis can be performed to strive for specific internally-set or externally-set benchmarks. To correctly implement ratio analysis to compare different companies, consider only analyzing similar companies within the same industry.

This reveals insights like what portion of assets are tied up in inventory versus current assets or how reliance on debt financing changes over time. Horizontal analysis provides a critical historical perspective when deciding whether to invest in a stock. Reviewing financial ratios like return on assets and profit margins over the past 5-10 years reveals positive or negative trajectories. Key ratios include the payback period, accounting rate of return (ARR), net present value (NPV), and internal rate of return (IRR). The payback period measures how long it takes to recover an investment.

They use the data to determine if a company’s financial health is on an upward or downward trend and to draw comparisons to other competing firms. For any major industry, investors find industry average ratios for profitability, liquidity, leverage, efficiency, and growth. Comparing a company’s current ratios and trends to the industry averages provides an important perspective on their relative performance.

Financial analysis also helps investors decide whether to invest in a particular company or fund. Investors can more easily compare different companies and predict future https://www.adprun.net/ performance. There is a wide range of techniques used in financial planning and analysis. First we’ll cover the 3 key financial statements and horizontal analysis.

A higher RAROC indicates an investment with attractive returns, given the risk level. An average investor concludes that investors are willing to pay $100 per $1 of earnings ABC generates and only $10 per $1 of earnings DEF generates. Financial experts use these ratios as tools for evaluating different Financial Statements.

Using projected data in addition to historical ratios helps to offset this limitation. Capital budgeting ratios evaluate the profitability and return on proposed capital investments and projects. The price-to-sales Ratio (P/S ratio) compares a company’s market capitalization to its total sales or revenue. It helps gauge whether a stock is overvalued or undervalued relative to its top-line revenue. The price-to-book Ratio (P/B ratio) compares a company’s market valuation to its book value or net assets.

The greater the percentage of assets, the better a company’s solvency. That’s because a company’s executive or management team has the flexibility to, at times, alter its strategies to make a company’s ratios and stock appear more attractive. A higher quick ratio indicates more short-term liquidity and good financial health.

For example, an investor uses horizontal analysis on the income statement to calculate the year-over-year change in revenue, cost of goods sold, operating expenses, net income, and other accounts. This provides insight into the company’s sales growth, profitability improvements, and other trends. Comparing balance sheet numbers horizontally shows changes in asset accounts, liabilities, and equity over time. The working capital ratio measures a company’s short-term liquidity and ability to meet its upcoming financial obligations.

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UPDATED 20:09 EDT / MAY 26 2024

Research shows OpenAI’s GPT-4 outperforms humans in financial statement analysis, but skeptics aren’t convinced

by Mike Wheatley

OpenAI’s GPT-4 large language model has reportedly demonstrated an ability to analyze financial statements with a level of accuracy that surpasses the best human financial analysts.

The claim comes via a paper written by researchers at the University of Chicago, who say their results suggest a promising future for generative artificial intelligence in the field of financial analysis.

According to the researchers, whose work was first picked up by VentureBeat , GPT-4 was used to analyze the financial statements of publicly listed enterprises, in order to try and predict their future earnings growth. They claim it is incredibly successful, outperforming human financial analysts even when provided with only a few standardized and anonymized balance sheets and income statements, without any additional context.

“We find that the prediction accuracy of the LLM is on par with the performance of a narrowly trained state-of-the-art ML model,” wrote the authors of the report, titled “ Financial Statement Analysis with Large Language Models .”

The researchers explained how they used a technique known as “ chain-of-thought ” prompting to enable GPT-4 to undertake more complex reasoning, essentially mimicking the thought processes of a human financial analysis. By teaching the model to identify trends, compute ratios and synthesize information, they were able to coax it into making accurate predictions. According to the paper, GPT-4 could predict the direction of future earnings with 60% accuracy, surpassing the 53% to 57% accuracy of most human financial analysts.

“LLM prediction does not stem from its training memory,” the researchers said. “Instead, we find that the LLM generates useful narrative insights about a company’s future performance.”

The researchers speculate that GPT-4’s superior performance likely stems from the vast knowledge base it is able to draw upon, together with its ability to recognize business concepts and patterns and conduct intuitive reasoning even with incomplete datasets.

“Taken together, our results suggest that LLMs may take a central role in decision-making,” the researchers said.

Others are skeptical

Whether or not wealthy human investors will be willing to trust GPT-4 is another question, though, and there are reasons to be skeptical of the researchers’ claims. On the Hacker News forum, a user called flourpower471 pointed out that the artificial neural network model used as a benchmark by the researchers dates back to 1989, and cannot be compared to the most advanced models used by financial analysts today.

“That ANN benchmark is nowhere near state of the art,” he said.. “People didn’t stop working on this in 1989 — they realized they can make lots of money doing it and do it privately.”

AI researcher Matt Holden also called into question the researchers’ claims, posting on X that GPT-4 is unlikely to be able to pick stocks that can actually best the performance of a broader index such as the S&P 500.

Not sure about this framing. Seems misleading, no? The “median analyst” can’t actually successfully “pick stocks” and beat a simple vanguard index fund, so why compare that with an LLM? I don’t doubt an LLM can outperform median analysts at specific tasks like writing… — Matt Holden (@holdenmatt) May 24, 2024

Holger Mueller of Constellation Research Inc. said it’s important to understand that while AI is clearly faster at crunching data and going back in time to search for patterns, such as in financial performance, it lacks the same kind of spark as the human brain. “Humans can only analyze data and find patterns by using a whole lot of time and energy,” the analyst said. “But AI cannot match the creativity, fantasies and experience of humans, or at least not yet. Unless these three are addressed and made available to AI, the human will still win.”

Although there’s a long way to do, the researchers say they are encouraged, all the more so because numerical analysis of this kind has traditionally always been something of a challenge for LLMs. Alex Kim, one of the study’s co-authors, said it has always been very difficult for models to carry out computations, perform interpretations and make complex judgments in the same way as a human analyst might.

“While LLMs are effective at textual tasks, their understanding of numbers typically comes from the narrative context and they lack deep numerical reasoning or the flexibility of a human mind,” he said.

Although human financial analysts are unlikely to be replaced by AI anytime soon, the researchers say they believe LLMs can be powerful tools that help to streamline their work, and perhaps make them more effective at their jobs.

The researchers have created an interactive web application for ChatGPT Plus subscribers that can demonstrate GPT-4’s ability to perform financial analysis, though they remind users that they’ll need to verify its accuracy independently.

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Hasanaj, Petrit, and Beke Kuqi. "Analysis of Financial Statements." Humanities and Social Science Research 2, no. 2 (June 19, 2019): p17. http://dx.doi.org/10.30560/hssr.v2n2p17.

Du Toit, Elda, and Frans Vermaak. "Company financial health: Financial statement users’ and compilers’ perceptions." Journal of Economic and Financial Sciences 7, no. 3 (October 31, 2014): 819–36. http://dx.doi.org/10.4102/jef.v7i3.239.

Halim, Kusuma Indawati. "An Empirical Analysis on the Integrity of Financial Statements." Journal of Advanced Research in Dynamical and Control Systems 12, no. 5 (May 30, 2020): 544–49. http://dx.doi.org/10.5373/jardcs/v12i5/20201973.

NAZ SITEPU, BAHRUM, Endang Kurniati, Mardiah Hasanah Nasution, and Rahmad Dani. "The Effects of Punctuality, Quality of Financial Statements, And The Effectiveness of Financial Statement Information on The Improvement of Company Financial Statement Performance." Journal of Economics, Finance and Accounting Studies 3, no. 2 (October 23, 2021): 101–5. http://dx.doi.org/10.32996/jefas.2021.3.2.11.

Jamaludin, Agus, Nahason Sihotangand, and Firdaus Budhy Saputro. "ANALYSIS OF FINANCIAL STATEMENTS PERTAMINA 2017." International Journal of Engineering Technologies and Management Research 6, no. 9 (April 22, 2020): 68–75. http://dx.doi.org/10.29121/ijetmr.v6.i9.2019.575.

Orparani, Bettynia Dwi, and Yumniati Agustina. "IMPLEMENTASI PENYUSUNAN LAPORAN KEUANGAN BERDASARKAN SAK EMKM PADA UMKM PASTELLIA INTERMODA BUMI SERPONG DAMAI DENGAN MENGGUNAKAN APLIKASI SI APIK PERIODE 2018 – 2019." Jurnal Ilmiah Akuntansi Rahmaniyah 4, no. 2 (August 15, 2021): 160. http://dx.doi.org/10.51877/jiar.v4i2.198.

Drake, Michael S., Phillip J. Quinn, and Jacob R. Thornock. "Who Uses Financial Statements? A Demographic Analysis of Financial Statement Downloads from EDGAR." Accounting Horizons 31, no. 3 (April 1, 2017): 55–68. http://dx.doi.org/10.2308/acch-51736.

Ferina, Veren, and Amrulloh Amrulloh. "Analisis Kinerja Keuangan Pada Industri Property dan Real Estate Serta Kontribusinya Terhadap Pendapatan Negara Dari Sektor Pajak." Jurnal Ilmiah Akuntansi Kesatuan 8, no. 2 (August 17, 2020): 227–36. http://dx.doi.org/10.37641/jiakes.v8i2.381.

Radjabov, Sardor Abdinazar Ugli. "Analysis Of Methods Of Verification Of Tax And Financial Statements." American Journal of Management and Economics Innovations 02, no. 10 (October 13, 2020): 6–10. http://dx.doi.org/10.37547/tajmei/volume02issue10-02.

B., Utibaev, and Akhmetova D. "Issues of conducting system analysis according to the financial statements." ECONOMIC Series of the Bulletin of the L.N. Gumilyov ENU 130, no. 1 (2020): 210–20. http://dx.doi.org/10.32523/2079-620x-2020-1-210-220.

Fera Riske Anggita and Tommy Kuncara. "Analysis Of Presentation Of Sharia Financial Statements According To Psak 101 At Pt. Mandiri Sharia Bank." International Journal of Science, Technology & Management 2, no. 4 (July 23, 2021): 1175–83. http://dx.doi.org/10.46729/ijstm.v2i4.283.

Atufah, Intan Devi. "PENERAPAN PSAK NO.45 TENTANG PELAPORAN KEUANGAN ORGANISASI NIRLABA YAYASAN PENDIDIKAN PONDOK PESANTREN AL-KHAIRIYAH." International Journal of Social Science and Business 2, no. 3 (December 6, 2018): 115. http://dx.doi.org/10.23887/ijssb.v2i3.16218.

Indawatika, Feri. "Penyusunan Laporan Keuangan Berbasis SAK ETAP Koperasi Intako Dan Respon Pihak Eksternal." Journal of Accounting Science 1, no. 1 (May 31, 2017): 38. http://dx.doi.org/10.21070/jas.v1i1.788.

Nur Fajri, Sidik. "THE EFFECT OF FINANCIAL STABILITY, EXTERNAL PRESSURE, PERSONAL FINANCIAL NEED, FINANCIAL TARGETS, INEFFECTIVE MONITORING AND AUDIT QUALITY ON DETECTING FRAUD FINANCIAL STATEMENT IN PERSPECTIVE OF FRAUD TRIANGLE." Journal of Business Economics 23, no. 2 (2018): 191–99. http://dx.doi.org/10.35760/eb.2018.v23i2.1828.

Sabatian, Zakharia, and Francis M. Hutabarat. "THE EFFECT OF FRAUD TRIANGLE IN DETECTING FINANCIAL STATEMENT FRAUD." Jurnal Akuntansi 10, no. 3 (October 31, 2020): 231–44. http://dx.doi.org/10.33369/j.akuntansi.10.3.231-244.

Isaković-Kaplan, Ševala, Lejla Demirović, and Mahir Proho. "Benford’s Law in Forensic Analysis of Income Statements of Economic Entities in Bosnia and Herzegovina." Croatian Economic Survey 23, no. 1 (June 8, 2021): 31–61. http://dx.doi.org/10.15179/ces.23.1.2.

Ivanchuk, Nataliia. "FINANCIAL STATEMENTS AS AN INFORMATION SOURCE FOR THE FINANCIAL CONDITION ANALYSIS AT THE ENTERPRISE." Scientific Notes of Ostroh Academy National University, "Economics" Series 1, no. 18(46) (September 24, 2020): 57–61. http://dx.doi.org/10.25264/2311-5149-2020-18(46)-57-61.

Mbona, Reginald Masimba, and Kong Yusheng. "Financial statement analysis." Asian Journal of Accounting Research 4, no. 2 (October 14, 2019): 233–45. http://dx.doi.org/10.1108/ajar-05-2019-0037.

Gujarathi, Mahendra R. "Sachiko Corporation: A Case in International Financial Statement Analysis." Issues in Accounting Education 23, no. 1 (February 1, 2008): 77–101. http://dx.doi.org/10.2308/iace.2008.23.1.77.

Triyanto, Dedik Nur. "Fraudulence Financial Statements Analysis using Pentagon Fraud Approach." Journal of Accounting Auditing and Business 2, no. 2 (July 29, 2019): 26. http://dx.doi.org/10.24198/jaab.v2i2.22641.

김이배. "Financial Statements Analysis under IFRS－Focusing on Financial Ratio Analysis－." Global Business Administration Review 9, no. 4 (December 2012): 85–109. http://dx.doi.org/10.17092/jibr.2012.9.4.85.

Nelson, Mark W., and William B. Tayler. "Information Pursuit in Financial Statement Analysis: Effects of Choice, Effort, and Reconciliation." Accounting Review 82, no. 3 (May 1, 2007): 731–58. http://dx.doi.org/10.2308/accr.2007.82.3.731.

Afif, Muhammad Nur, and Muhammad Yusuf. "ANALISIS LAPORAN KEUANGAN RUMAH SAKIT BERDASARKAN KMK NOMOR 1981 TAHUN 2010 PADA RSUD CIMACAN." JURNAL AKUNIDA 3, no. 2 (December 28, 2017): 66. http://dx.doi.org/10.30997/jakd.v3i2.977.

Rasyid, Muhammad. "ANALYSIS OF THE IMPLEMENTATION OF FINANCIAL ACCOUNTING STANDARDS WITHOUT PUBLIC ACCOUNTABILITY (SAK ETAP) ON THE PRESENTATION OF GIRIREJO VILLAGE UNIT'S COOPERATIVE FINANCIAL STATEMENTS." MARGINAL : JOURNAL OF MANAGEMENT, ACCOUNTING, GENERAL FINANCE AND INTERNATIONAL ECONOMIC ISSUES 1, no. 2 (February 25, 2022): 11–18. http://dx.doi.org/10.55047/marginal.v1i2.112.

Dewi, Krisna, and Indah Anisykurlillah. "Analysis of the Effect of Fraud Pentagon Factors on Fraudulent Financial Statement with Audit Committee as Moderating Variable." Accounting Analysis Journal 10, no. 1 (March 9, 2021): 39–46. http://dx.doi.org/10.15294/aaj.v10i1.44520.

VAN AUKEN, HOWARD, and KUI YANG. "CHINESE SMEs' USES OF FINANCIAL STATEMENTS IN DECISION MAKING." Journal of Developmental Entrepreneurship 19, no. 04 (December 2014): 1450027. http://dx.doi.org/10.1142/s1084946714500277.

Bansal, Rohit, and Sanjay Kumar Kar. "Departmental stores in India: financial performance analysis." Emerald Emerging Markets Case Studies 11, no. 3 (September 30, 2021): 1–28. http://dx.doi.org/10.1108/eemcs-04-2020-0100.

Widnyani, Nyoman Ari, and A. A. G. P. Widanaputra. "Kompetensi, Beban Kerja dan Kualitas Penyajian Laporan Keuangan di UPT Kementerian LHK Bali." E-Jurnal Akuntansi 31, no. 1 (January 26, 2021): 220. http://dx.doi.org/10.24843/eja.2021.v31.i01.p17.

Hendri, Alfi, and Satriadi. "ANALISIS LAPORAN KEUANGAN PADA PT. NIDEC INDONESIA BINTAN DI TANJUNGPINANG TAHUN 2015-2018." JURNAL CAFETARIA 2, no. 2 (June 30, 2021): 54–61. http://dx.doi.org/10.51742/akuntansi.v2i2.359.

Mariati and Emmy Indrayani. "FRAUD TRIANGLE ANALYSES IN DETECTING FRAUDULENT FINANCIAL STATEMENT USING FRAUD SCORE MODEL." Jurnal Ilmiah Ekonomi Bisnis 25, no. 1 (2020): 29–44. http://dx.doi.org/10.35760/eb.2020.v25i1.2240.

Archambault, Jeffrey J., and Marie E. Archambault. "FINANCIAL REPORTING IN 1920: THE CASE OF INDUSTRIAL COMPANIES." Accounting Historians Journal 37, no. 1 (June 1, 2010): 53–90. http://dx.doi.org/10.2308/0148-4184.37.1.53.

Yasinta Asiani and Setyo Riyanto. "Analysis of Financial Performance In Company PT. Indofood Sukses Makmur Tbk. Based On Ratio Analysis Liquidity and Profitability Period 2015-2019." Journal of Sosial Science 1, no. 5 (November 25, 2020): 260–65. http://dx.doi.org/10.46799/jsss.v1i5.44.

Shehu, Blerim. "ANALYSIS FOR THE PURPOSE OF CREDIT." KNOWLEDGE INTERNATIONAL JOURNAL 31, no. 5 (June 5, 2019): 1425–29. http://dx.doi.org/10.35120/kij31051425s.

Rao, Mayur. "Financial Statement Analysis of ONGC LTD. with reference to: Horizontal Analysis & Common Size Analysis." Journal of Management and Science 1, no. 2 (June 30, 2013): 215–25. http://dx.doi.org/10.26524/jms.2013.27.

Pasaribu, Boni A. "Growth Of Financial Performance PT. Gresik Cipta Sejahtera (GCS) Year 2011-2014 Using Financial Ratio Analysis." Inspirasi & Strategi (INSPIRAT): Jurnal Kebijakan Publik & Bisnis 12, no. 1 (July 30, 2021): 1–8. http://dx.doi.org/10.35335/inspirat.v12i1.51.

Szybowski, Daniel. "THE FINANCIAL STATEMENTS AS THE BASIC SOURCE OF ASSESSMENT OF THE ENTERPRISE. LEGAL AND ECONOMIC ASPECTS." International Journal of Legal Studies ( IJOLS ) 4, no. 2 (December 30, 2018): 483–504. http://dx.doi.org/10.5604/01.3001.0013.0030.

Bustamam, Bustamam, Ridwan Ibrahim, and Dedy Saputra. "Analisis Penyajian Laporan Keuangan Syariah Pada Baitul Mal Provinsi Aceh." Jurnal Dinamika Akuntansi dan Bisnis 2, no. 1 (March 1, 2015): 82–91. http://dx.doi.org/10.24815/jdab.v2i1.3620.

Zulkifli, Zulkifli, Boy Syamsul Bakhri, and Rahmawati Rahmawati. "Analisis Penyajian laporan Keuangan Koperasi Syariah BMT Al-Ittihad Pekanbaru." Al-Hikmah: Jurnal Agama dan Ilmu Pengetahuan 16, no. 1 (September 17, 2019): 1–22. http://dx.doi.org/10.25299/jaip.2019.vol16(1).2869.

Safitry, Helda Aslim, Dwi Iga Luhsasi, and Carolina Lita Permatasari. "ANALYSIS OF FINANCIAL STATEMENT IN ASSESSING THE FINANCIAL PERFORMANCE OF LOCAL GOVERNMENT." Jurnal Riset Akuntansi Kontemporer 13, no. 2 (October 18, 2021): 65–71. http://dx.doi.org/10.23969/jrak.v13i2.3955.

Sunarto, Pandu Prahadi Pangestu, Elfreda Aplonia Lau,. "EVALUASI STANDAR AKUNTANSI KEUANGAN ENTITAS MIKRO KECIL DAN MENENGAH (SAK EMKM) TAHUN 2018 PADA USAHA SINAR TERANG DI SAMARINDA." Research Journal of Accounting and Business Management 3, no. 1 (July 1, 2019): 152. http://dx.doi.org/10.31293/rjabm.v3i1.4215.

Ayuningrum, Octaviana Dian, and Tumirin Tumirin. "Model Prediksi Pelanggaran Akuntansi." JIATAX (Journal of Islamic Accounting and Tax) 2, no. 2 (June 18, 2020): 149. http://dx.doi.org/10.30587/jiatax.v2i2.1417.

Sulhani, Sulhani, and Hangga Darisman. "The comparative analysis of discretionary accruals viewed from the styles of audit and IFRS adoption." Journal of Economics, Business & Accountancy Ventura 18, no. 3 (December 30, 2015): 439. http://dx.doi.org/10.14414/jebav.v18i3.513.

Kristiana, Ida. "EFEK KONVERGENSI KERANGKA DASAR IFRS (IAS 12 REVISI) TERHADAP PSAK 46." MAKSIMUM 7, no. 1 (November 6, 2019): 48. http://dx.doi.org/10.26714/mki.7.1.2017.48-57.

Eltahir Khalifa, Hussein Mohammed, and Siddig Mohammed ELbashir Abdelrahman. "USES OF PUBLISHED FINANCIAL STATEMENTS IN FUNDING DECISIONS." International Journal of Research -GRANTHAALAYAH 8, no. 1 (June 4, 2020): 150–64. http://dx.doi.org/10.29121/granthaalayah.v8.i1.2020.262.

., Hastoni, Bambang Pamungkas, and Dinah Sobar Mustikawati. "Analisis Penerapan PSAK 45 (Revisi 2011) Terhadap Penyusunan Laporan Keuangan Entitas Nirlaba (Studi Kasus pada Yayasan Dharma Setia Kosgoro)." Jurnal Ilmiah Akuntansi Kesatuan 3, no. 2 (July 25, 2018): 101–10. http://dx.doi.org/10.37641/jiakes.v3i2.52.

Tresnawati, Fera, and R. Nelly Nur Apandi. "PENGARUH TINDAK LANJUT HASIL PEMERIKSAAN TERHADAP KUALITAS LAPORAN KEUANGAN DENGAN TINGKAT PENGUNGKAPAN LAPORAN KEUANGAN SEBAGAI VARIABEL MODERATING (STUDI EMPIRIS PADA KEMENTERIAN/LEMBAGA REPUBLIK INDONESIA)." Jurnal ASET (Akuntansi Riset) 8, no. 1 (June 20, 2016): 1. http://dx.doi.org/10.17509/jaset.v8i1.4017.

Priyastiwi, Priyastiwi, and Nunung Saputra. "PENGARUH KINERJA KEUANGAN DAN KARAKTERISTIK DAERAH TERHADAP PENYAJIAN LAPORAN KEUANGAN PEMERINTAH DAERAH MELALUI INTERNET." Jurnal Riset Manajemen Sekolah Tinggi Ilmu Ekonomi Widya Wiwaha Program Magister Manajemen 6, no. 2 (March 3, 2020): 157–72. http://dx.doi.org/10.32477/jrm.v6i2.21.

Priyastiwi, Priyastiwi, and Nunung Saputra. "PENGARUH KINERJA KEUANGAN DAN KARAKTERISTIK DAERAH TERHADAP PENYAJIAN LAPORAN KEUANGAN PEMERINTAH DAERAH MELALUI INTERNET." Jurnal Riset Manajemen Sekolah Tinggi Ilmu Ekonomi Widya Wiwaha Program Magister Manajemen 6, no. 2 (July 16, 2019): 157–72. http://dx.doi.org/10.32477/jrm.v6i2.356.

Rosalina, Eka, Wiwik Andriyani, Afridian Wirahadi, Fera Sriyuniati, and Desi Handayani. "Excel For Accounting Untuk Penyusunan Laporan Keuangan Pada Yayasan Panti Asuhan." Akuntansi dan Manajemen 15, no. 1 (June 1, 2020): 102–7. http://dx.doi.org/10.30630/jam.v15i1.61.

Wahyuni, Wahyuni, and Gideon Setyo Budiwitjaksono. "FRAUD TRIANGLE SEBAGAI PENDETEKSI KECURANGAN LAPORAN KEUANGAN." Jurnal Akuntansi 21, no. 1 (April 12, 2017): 47. http://dx.doi.org/10.24912/ja.v21i1.133.

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FC105 Financial Records Examination and Analysis

This course covers the acquisition, examination, and analysis of many types of financial records, including bank statements and checks, wire transfer records, and business records. Topics include recognizing and investigating common indicators of fraud, using spreadsheets to facilitate analysis and pattern recognition, and financial profiling. There is a strong focus on presenting financial evidence in multiple modalities: spreadsheet data outputs, graphic representations, and written/oral presentations.

*Introduction to analysis. Best practices. Finding patterns. Indicators of fraud. Presenting your findings. *Financial records. Bank records. Business documents. *Financial profiling. Methods of profiling. Reasons to create a profile. Creating a profile. *Hands-on experience. Work a mock financial case as part of an investigative team.

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Israeli Views of the Israel-Hamas War

Jewish Israelis and Arab Israelis see the war very differently

Table of contents.

Views of the Israeli military response against Hamas
Attitudes toward Israel’s war cabinet
Current concerns about the war
Confidence in Biden
Views of how Biden is handling the Israel-Hamas war
Who is Biden favoring in the conflict, or is he striking the right balance?
Views of the U.S.
Who Israelis want to play a role in diplomatically resolving the war
Success against Hamas
Israel’s future national security
The future of Gaza
Views of Palestinian leaders
Palestinian statehood and coexistence
Acknowledgments
Methodology

This Pew Research Center analysis covers Israeli attitudes on the Israel-Hamas war, including opinions on how it’s being conducted, the country’s future, Israeli political leaders and the United States’ role in the conflict.

The data is from a survey of 1,001 Israeli adults conducted face-to-face from March 3 to April 4, 2024. Interviews were conducted in Hebrew and Arabic, and the survey is representative of the adult population ages 18 and older, excluding those in East Jerusalem and non-sanctioned outposts. (The survey also did not cover the West Bank or Gaza.) The survey included an oversample of Arabs in Israel. It was subsequently weighted to be representative of the Israeli adult population with the following variables: gender by ethnicity, age by ethnicity, education, region, urbanicity and probability of selection of respondent.

Here are the questions used for the report, along with responses, and the survey methodology .

A bar chart showing that Israelis are divided over the country’s military response against Hamas in Gaza

A new Pew Research Center survey finds that 39% of Israelis say Israel’s military response against Hamas in Gaza has been about right, while 34% say it has not gone far enough and 19% think it has gone too far.

According to the survey, conducted in March and early April, roughly two-thirds of Israelis are also confident that Israel will either probably (27%) or definitely (40%) achieve its goals in the war against Hamas. Still, majorities of Israeli adults are worried about aspects of the ongoing war:

61% say they are extremely or very concerned about the war expanding into other countries in the region.
68% say they are extremely or very concerned about the war going on for a long time.

When it comes to what should happen after the war, there is less consensus. A 40% plurality of Israelis think Israel should govern the Gaza Strip. Smaller shares think Gazans should decide who governs (14%) or would like to see a Palestinian Authority national unity government either with (6%) or without (12%) President Mahmoud Abbas (also known as Abu Mazen) in leadership.

Separately, 26% of Israelis think a way can be found for Israel and an independent Palestinian state to coexist peacefully with each other – down from 35% who said the same last year , prior to the war, and about half as many as took that position when the question was first asked in 2013.

Research in the West Bank and Gaza

Pew Research Center has polled the Palestinian territories in previous years, but we were unable to conduct fieldwork in Gaza or the West Bank for our March/April 2024 survey due to security concerns. We are actively investigating possibilities for both qualitative and quantitative research on public opinion in the region and hope to be able to provide more data in the coming months.

These are among the key findings of a new survey of 1,001 Israelis, conducted via face-to-face interviews from March 3 to April 4, 2024.

The survey also asked Israelis about the U.S. role in the conflict. (It was conducted before U.S. President Joe Biden took a tougher stance toward Israel in the wake of an Israeli airstrike that killed seven World Central Kitchen aid workers. And it predates Biden’s declaration that the U.S. would not provide offensive weapons to Israel in the event of a Rafah invasion as well as the subsequent Israeli strikes in Rafah .)

The survey shows:

60% of Israelis disapprove of the way Biden is handling the Israel-Hamas war.
41% think Biden is striking the right balance between Israelis and Palestinians. Still, 27% of Israelis say he is favoring Israelis too much, while roughly the same share (25%) say he favors Palestinians too much.
Most Israelis express confidence in Biden to handle world affairs and have a favorable view of the U.S. But ratings of both Biden and the U.S. have fallen at least 10 percentage points since last year. (For more on this, read “How Israelis and Americans view one another and the U.S. role in the Israel-Hamas war.” )

A bar chart showing that a Majority of Israelis want the U.S. to play a major role in diplomatically ending the war

Nonetheless, a large majority (72%) still want the U.S. to play a major role in diplomatically resolving the war – more than say the same about any of the other countries or organizations asked about, including Egypt (45%), Saudi Arabia (29%), Qatar (27%) and the United Nations (24%).

Arab and Jewish Israelis

A dot plot showing that Israeli Arabs and Jews diverge sharply over views of the U.S., Israel-Hamas war and Biden’s handling of it

People across Israeli society perceive the war in vastly different ways, depending on their views of the current leadership, how they identify ideologically, their religious backgrounds and other factors. One of the starkest divides is between Arab and Jewish Israelis:

Arab Israelis are less likely than Jewish Israelis to think Israel will succeed in achieving its war aims (38% vs. 76%) and less optimistic when thinking about the future of the country’s national security (21% vs. 63%).
Israeli Arabs are much more likely than Jews to say the country’s military response has gone too far (74% vs. 4%).
Almost no Israeli Arabs (3%) want Israel to govern the Gaza Strip after the war, while half of Israeli Jews think it should do so. A plurality of Arabs would like the people who live in Gaza to decide who governs (37%), while only 8% of Jews prefer this outcome.
Arab Israelis have much less favorable views of the U.S. than Jewish Israelis do (29% vs. 90%), as well as less confidence in Biden (21% vs. 66%). They are also much more likely to disapprove of Biden’s handling of the war (86% vs. 53%) and to think he favors Israelis too much (86% vs. 11%).
Although a majority of Arabs (63%) want the U.S. to play a major role in diplomatically resolving the war between Israel and Hamas, an even greater share of Jewish Israelis (74%) want this. And roughly two-thirds of Arabs are open to Qatar and Egypt playing a major role, while only about four-in-ten Jews or fewer say the same.
Roughly nine-in-ten Arabs (92%) have a negative view of Israeli Prime Minister Benjamin Netanyahu, compared with around half of Jews (48%). Views of the two other war cabinet members , Benny Gantz and Yoav Gallant, are also divided along ethnic lines. (The survey was conducted before Gantz threatened to leave the war cabinet .)

In many cases, there are also large ideological differences, with Israelis who describe themselves as being on the left generally more critical of Israel’s war response, less optimistic about its success and more critical of the U.S. than those on the right. There also tend to be differences among Israeli Jews based on how religiously observant they are. For more on how we looked at these differences, refer to the box below.

Jewish religious groups in Israel: Haredim, Datiim, Masortim and Hilonim

Nearly all Israeli Jews identify as either Haredi (commonly translated as “ultra-Orthodox”), Dati (“religious”), Masorti (“traditional”) or Hiloni (“secular”). The spectrum of religious observance in Israel – on which Haredim are generally the most religious and Hilonim the least – does not always line up perfectly with Israel’s political spectrum. On some issues, including those pertaining to religion in public life, there is a clear overlap: Haredim are furthest to the right, and Hilonim are furthest to the left, with Datiim and Masortim in between. But on other political issues, including those related to the Israeli-Palestinian conflict and views of the United States, differences between religious groups do not always mirror those between people at different points on the ideological spectrum. Because of sample size considerations, we combine Haredim and Datiim for analysis in this report.

For more information on the different views of these religious groups, read the Center’s 2016 deep dive on the topic, “Israel’s Religiously Divided Society.”

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ABOUT PEW RESEARCH CENTER Pew Research Center is a nonpartisan fact tank that informs the public about the issues, attitudes and trends shaping the world. It conducts public opinion polling, demographic research, media content analysis and other empirical social science research. Pew Research Center does not take policy positions. It is a subsidiary of The Pew Charitable Trusts .

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In this free guide, we will break down the most important types and techniques of financial statement analysis. This guide is designed to be useful for both beginners and advanced finance professionals, with the main topics covering: (1) the income statement, (2) the balance sheet, (3) the cash flow statement, and (4) rates of return. 1.
Financial analysis
Financial analysis Magazine Article. James L. Heskett. Thomas O. Jones. Gary W. Loveman. W. Earl Sasser, Jr. Leonard A. Schlesinger. When service companies put employees and customers first, a ...
Financial Statement Analysis
Financial statement analysis is one of the most fundamental practices in financial research and analysis. In layman's terms, it is the process of analyzing financial statements so that decision-makers have access to the right data. Financial statement analysis is also used to take the pulse of a business. Since statements center on a company ...
Full article: Reporting matters: the real effects of financial
Indirect measures of accounting quality include audit outcomes and regulatory interventions. For example, when a firm discloses an internal control problem, it is highlighting the potential for a misstatement in the financial statements. Research uses this as evidence of low accounting quality.
Financial Statement Analysis
Source: The Bank of Korea, Financial Statement Analysis For 1997. The financial structures were also plagued with the duration mismatch because most of the long-term investments were funded with short-terms loans. As of June 1997 the ratio of short-terms borrowings to total debts was over 51.0%.
Financial Statement Analysis
Abstract. This chapter provides fundamental financial analysis based on ratio analysis, a powerful tool to assess the performance of a firm over a period, or to compare risk and return of firms of different sizes. The discussion centres on the income statement, the balance sheet, the statement of shareholders' equity, and the cash flow ...
Financial Statement Analysis: How It's Done, by Statement Type
Financial statement analysis is the process of reviewing and evaluating a company's financial statements (such as the balance sheet or profit and loss statement), thereby gaining an understanding ...
Financial statements
Reduce the Risk of Failed Financial Judgments. Strategy & Execution Magazine Article. Robert G. Eccles. Edward J. Riedl. When crucial financial estimates rely on judgment, companies can minimize ...
A
Common-size percentage = ($110,000 $250,000) × 100 = 44% Common-size percentage = ( $110,000 $250,000) × 100 = 44%. Cash in the current year is $110,000 and total assets equal $250,000, giving a common-size percentage of 44%. If the company had an expected cash balance of 40% of total assets, they would be exceeding expectations.
Introduction to Financial Analysis
This Open Textbook is a dynamic guide incorporating the essential skills needed to build a foundation in Financial Analysis. Students and readers will learn how to insightfully read a Financial Statement, utilize key financial ratios in order to derive forward-looking investment-related inferences from the accounting data, engage in elementary forecasting and modeling, master the theory of the ...
Financial Analysis: Definition, Importance, Types, and Examples
Financial analysis is the process of evaluating businesses, projects, budgets and other finance-related entities to determine their performance and suitability. Typically, financial analysis is ...
Financial Statement Analysis for Non-Accountants
The most common types of financial statements that you may encounter include: Balance sheets, income statements, cash flow statements, and statements of shareholder equity. 1. Balance Sheets. A balance sheet is designed to communicate the "book value" of a company. It's a simple accounting of all of the company's assets, liabilities ...
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Our analysis of the relevant literature led to the recommendation of several potential research topics. The research process and the related qualitative methodology are not without limitations. ... G., Slof, J., Solà, M., Torrent, M., & Vilardell, I. (2011). Assessing the impact of Fair-Value accounting on financial statement analysis: A data ...
Financial statement analysis: a review and
Introduction. In this paper I review the trends in the literature on financial statement analysis (FSA), and provide insights into the relevance of FSA research in emerging trends. FSA research is generally concerned with two key issues - improving fundamental analysis and identifying market inefficiencies with respect to financial statement ...
Financial Statement Analysis: A Review and Current Issues
In this paper, I review the extant research on financial statement analysis. I then provide some preliminary evidence using Chinese data and offer suggestions for future research, with a focus on utilising unique features of the Chinese business environment as motivation. ... Subscribe to this fee journal for more curated articles on this topic ...
(PDF) ANALYSIS OF FINANCIAL STATEMENTS
Financial Statement Analysis is a method of reviewing a nd analyzing a. company's accounting reports (financial statements) in order to gauge its past, present or projected future performance ...
(PDF) Analysis of Financial Statements
Financial analysis is a study of the company's finan cial statements by analyzing the reports. Report. analysis is a tool that easily calculates and interprets reports that are used by investors ...
Financial statement analysis: a review and current issues
The literature on financial statement analysis attempts to improve fundamental analysis and to identify market inefficiencies with respect to financial statement information.,In this paper, the author reviews the extant research on financial statement analysis.,The author then provides some preliminary evidence using Chinese data and offer ...
Financial Statement Analysis with Large Language Models
Alex G. Kim, Maximilian Muhn, Valeri V. Nikolaev. GPT outperforms financial analysts in predicting companies' earnings changes, especially when analysts struggle, with accuracy comparable to state-of-the-art machine learning models. Based on BFI Working Paper No. 2024-65, "Financial Statement Analysis with Large Language Models".
What is Financial Analysis? Types & Examples
Financial ratios are mathematical calculations used to analyze a company's financial statements. Financial ratios provide insights into performance by comparing values over time and against industry benchmarks. The key categories of financial ratios are liquidity ratios, solvency ratios, efficiency ratios, profitability ratios, and valuation ...
GameStop Corp. Fundamental Company Report 2024 Including
Key Topics Covered RESEARCH METHODOLOGY 1. GAMESTOP CORP. COMPANY PROFILE 1.1. Key facts ... FINANCIAL ANALYSIS 4.1. Financial Statements 4.1.1. Income Statement 4.1.2. Balance Sheet 4.1.3. Cash Flow
Research shows OpenAI's GPT-4 outperforms humans in financial statement
OpenAI's GPT-4 large language model has reportedly demonstrated an ability to analyze financial statements with a level of accuracy that surpasses the best human financial analysts. The claim ...
Journal articles on the topic 'Analysis of financial statements'
Consult the top 50 journal articles for your research on the topic 'Analysis of financial statements.' Next to every source in the list of references, there is an 'Add to bibliography' button. Press on it, and we will generate automatically the bibliographic reference to the chosen work in the citation style you need: APA, MLA, Harvard, Chicago ...
FC105 Financial Records Examination and Analysis
This course covers the acquisition, examination, and analysis of many types of financial records, including bank statements and checks, wire transfer records, and business records. Topics include recognizing and investigating common indicators of fraud, using spreadsheets to facilitate analysis and pattern recognition, and financial profiling. There is a strong focus on presenting financial ...
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Research Topics & Ideas: Finance

Overview: Finance Research Topics

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Investment Banking

Private Equity & Venture Capital (VC)

Asset Management

Hedge Funds

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Treasury Management

Financial Technology (FinTech)

Commercial Banking

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Financial Statement Analysis

Written by True Tamplin, BSc, CEPF®

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Table of Contents

What Are Financial Statements?

Tools and Techniques Used For Financial Statement Analysis

Value of Financial Statement Analysis When Analyzing and Reporting Financial Statements

Identifying the Industry’s Economic Characteristics

Identifying Company Strategies

Assessing the Quality of a Company’s Financial Statements

Analyzing Profitability and Identifying Potential Business Risks

Preparing Financial Statement Forecasts

Financial Statement Analysis FAQs

Why is Financial Statement Analysis important?

What types of Financial Statements are analyzed?

What analysis techniques are used to review Financial Statements?

What information can be gathered through Financial Statement Analysis?

True Tamplin, BSc, CEPF®

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