Financial Analysis : An Organization

863 WordsJul 1, 20154 Pages
Financial Analysis: What are they? How to Create One? A financial analysis is the accounting reports for an organization, this can be imperative to evaluate a company’s economic wellbeing. One must review a company’s financial statements and ratios to start the financial analysis process. There are two types of ways in which a financial analysis occurs. One way to analyze an organization is one company being compared over a period of time. The second way is an assessment with comparable companies. When comparing businesses analysts use ratio analysis, to compare the two organizations. Financial analysis examins exactly how profitable an organization has become. There is not one specific way to create a financial analysis; however, the financial statements must be reviewed to decide how prosperous a company will be. A financial analysis basically explains the improvement of an organization, as well as if the organization could possibly be in a negative financial situation (Bethel University, 2011.). Financial Statements An organization collects financial results, conditions, and cash flow by using financial statements. Organizations use financial statements to determine the company’s capability of producing cash, ability to pay off financial debt, following trends in profitability, to explore the circumstance of the company, and also to examine business relations. If an organization decides to disclose information to investors or any other outside users they must follow
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