Financial Analysis
Financial analysis is the evaluation of a company’s past, present and future financial performance. Besides that, company’s also use financial analysis to evaluate company strength and weaknesses and provide some basic for the final decision making and planning. Meanwhile, financial analysis will help companies to check the performance compare with last years or whether is doing will or bad than other companies in same industry. The objective of financial analysis is to identify the company’s strengths and weakness. According to this financial analysis, companies can base on the report to take action like improve the weakness and improve their performance to defeat competitors in the industry.
Financial ratio is a ratio of two selected numerical values taken from the company financial statement. Financial ratio also calls as accounting ratio. Company used financial ratio because it can answer a kind of questions regarding the company financial condition and profitability. Next, financial ratios are used in an attempt to standardize financial information to facilitate meaningful comparisons. Meanwhile, the purposes of used financial ratio are to compare the performance of a company to another company in the same industry and compare the company performance between different financial periods. It also assessment on liquidity and going concern position of a company and also evaluate the efficiency of management by calculate the profitability and efficiency ratios.
Financial statement consists of income statement, balance sheet, cash flow statement as well as supplementary notes, chairman’s statement and so on. Each financial statement represents information and financial data relating to company’s current financial healthy, financial result of the previous years and useful for making decisions.