Brian Lagrange (Week 5 Discussion Financial Statement and Ratio Analyisis)

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Southern New Hampshire University *

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HCM400-R16

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Finance

Date

Feb 20, 2024

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docx

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Uploaded by SargentFireWolf16

Hello Class, When it comes to the discussion of Financial Statement Analysis the best way to definition of it would be is that Financial Statement Analysis involves using financial data to assess a company’s performance and make recommendations about how it can improve going forward. Financial analysts primarily carry out their work in “Excel”, using a spreadsheet to analyze historical data and make future projections of how they think the company will perform in the future. The Process of Financial statement analysis involves analyzing the financial statements of a business to assess the overall state of the company’s finances. An analysis of a company’s financial statements is conducted by taking a closer look at the data within such statements such as revenue, operating costs, receivables, and total assets (Pink & Song 2020). Based on the information obtained, managers can utilize the data to assist them in making decisions regarding the firm’s monetary status based on information obtained. A liquidity analysis is a type of ratio analysis aimed at determining whether a business would be able to meet its cash obligations when debts must be repaid at the end of the month. As the name suggests, the purpose of the tool is to determine if the business can meet its short-term obligations or how quickly the assets of the company get converted into cash (QuickBooks, 2019). An Analysis of a company’s current assets is done to ensure that most of its current assets are not tied up in receivables or inventories that cannot be readily converted into cash

and used to pay off a company’s debts when they are due, and to make sure that the company always has a constant stream of cash to pay off its current liabilities. (QuickBooks, 2019). To put it simply, liquid assets are resources that can be used in the current situation and that can be used as needed. A liquidity ratio analysis seeks to determine the amount of available funds that a company has at any given time. Among the liquid assets of a person are money in their pockets/purses or bank accounts. After researching the many types of Financial Statement Analysis I believe that one that best fits my project which is “Addus Home Health Care” would be a “Liquidity Analysis” because this is the type of Analysis that relies on the type of ratio that a company must rely to make sure that it has enough capital to cover all expenses that need to be paid by the end of the current month and future months going forward. The way I would use it to justify my proposal would be to make sure to use all necessary tools that are at my advantage to make sure that I meet my financial goals for that month. References: George H. Pink, & Paula H. Song. (2020). Gapenski’s Understanding Healthcare Financial Management, Eight Edition: Vol. Eight edition. AUPHA/HAP Book.

Understanding liquidity ratio Analysis. QuickBooks. (2019, July 25) Retrieved February 3, 2024 from: https://quickbooks.intuit.com/in/resources/accounting/understanding-liqudityratio- analysis

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