If the business represents a strategic purchase, a higher price might be garnered even for an over-valued private business. If a buyer is a minority buyer, they may want to pay less due to the minimal amount of control they can exert on the business Antia, para.
Basic financial statements include the balance sheet, the income statement, cash flow statement and notes to account. There are different types of reports because different types of information are needed to effectively manage a company and plan for the future. Sometimes companies use financial reporting information internally, and in some cases they are required to release this information externally. Tracy called cash the "lubricant" of business.
Without cash it is difficult for a business to function and it increases the likelihood that a business may fail. But, Tracy warned that cash flows only show part of the picture and give no information about the business' profit or financial condition. Since cash flows only show part of the picture, other types of financial reports are needed. The general categories on balance sheets are assets and liabilities. A publicly traded firm also includes shareholder equity.
A typical balance sheet shows assets a company owns. Assets include cash, accounts receivable, inventory and any prepaid expenses. Balance sheets also record property the company owns and any depreciation on assets.
The balance sheet is a two-sided report because it records assets on one side and liabilities on the other. Liabilities include accounts payable and accrued expenses, income tax owed, loans and stockholders' equity. Stockholders' or shareholders' equity is any claim that owners of company stock have against the assets that a company has.
Stockholders' or shareholders' equity is also called net worth. Income statements show the profitability of a business. The income statement is for a period of one year and shows the total sales revenue for the year. Subtracted from sales revenue is the cost of goods sold or the expenses a company incurs in producing finished goods to sell.
Also deducted from the revenue are expenses for operating costs and depreciation. If a company is publicly owned, its income statement must also report earnings per share Tracy, Earnings per share is a measure of company profitability Godin, It is calculated by dividing net income by the total shares of stock.
When looking at the income statement of a company, the profitability isn't just the gross profit, it is also important to look at the ratio of expenses as a percentage of profit. If a company has high profits but also has high expenses, the company could be mismanaged. Evidently, a businessman who plans to develop his business has to take risks, and if these risks are not controlled, it can lead to the bankrupting of the firm.
So, in order to keep the business under the constant control, an employer has to analyze the financial situation of the firm regularly and on the basis of the results make appropriate decisions.
A successful term paper on financial statement analysis should present the necessity of the constant analysis, the ways of the analysis, the methods, which are useful for the control of the finance and introduce some new effective methods what will make the paper valuable and informative.
A good term paper should be perfectly composed and contain rich methodology section and a wide list of the used literary sources. It should present wise conclusions, which reflect you are able to think constructively, soberly and critically.
Students who have to write a term paper will surely have troubles with it, because the topic is complicated and it is quite difficult to find enough data on it. No wonder, in order to complete a successful paper students rely on the Internet and read numerous free examples of term papers on financial statement analysis on a range of websites.
On one hand, samples are extremely helpful for students, because they present a good picture of term paper writing, the composition of the paper, the manner of presentation of data. On the other hand, examples are sometimes harmful when they are of poor quality and prepared by an amateur.
No company exists in a vacuum, so a financial analysis paper must include an examination of the company's industry. The report will include comparisons between the company's financial health and that of its competitors, and it will report the company's market share and prominence in the industry.
These factors help investors determine if the company is competitive in its industry and would make a profitable investment. Financial ratios can reveal such aspects as a company's liquidity, debt load and efficiency.
The current liquidity ratio is the ratio of the company's current assets to its current liabilities. The debt ratio is the ratio of the company's total debt to its total equity. The return on equity ratio weighs a company's profits against its shareholders' equity. The price to earnings ratio can be found by dividing the current market price per share by the after-tax earnings per share.
Living in Houston, Gerald Hanks has been a writer since
The analysis of financial statement is a study of establishing meaningful relationship between various financial facts and figure given in financial statement. The basic financial statement included balance sheet and income statement which is the indicating device of profitability and financial soundness of business concern.
Financial statements are records that can provide indications of the financial health of a company. Accurate financial records are necessary to keep track of financial warning signals such as.
Financial Statement Analysis Paper Example 1: Dell Computer Dell Inc. Current Year Prior Year 3 Years Ago $ Percent $ Percent $ Percent Income Statement . Sample essay on financial statements and their analysis.
A financial analysis paper details a company's financial health. While the company's history, financial statements and stock performance can all summarize different aspects of its financial performance, the financial analysis paper incorporates all of these details . Running head: FINANCIAL STATEMENT ANALYSIS PAPER Financial Statement Analysis Paper Principles of Accounting ACC/ Mr. John Opincar June 24, Abstract.