Fundamental Analysis

Financial Statement Analysis is the process of reviewing and analyzing a company’s financial statements to make better decisions. These statement includes the Income statement, Balance sheet, Statement of cash flows and a statement of changes in equity.

In order to ascertain how well a company is performing, analyses must be done in regard to the business being stable, including its’ ability to pay debts, how much cash or other liquid assets are available, and whether the organization is viable enough to continue operations. These analyses typically look at income statements, balance sheets, and statements of cash flow, where current and past performance will be studied with the goal of predicting how the company will perform in the future.

The success of a business depends on its ability to remain profitable over the long term, while being able to pay all its financial obligations and earning above average returns for its shareholders. This is made possible if the business is able to maximize on available opportunities and very efficiently and effectively use the resources it has to create maximum value for all involved stakeholders. One way the performance of a company can be measured on critical areas such as profitability, its ability to stay solvent, the amount of debt exposure and the effectiveness in resource utilization, is performing financial analysis where a set of ratios provides a snapshot of company performance and future

Prepare an 8- to 10-page fundamental financial analysis (excluding appendices, title page, abstract, and references page) that will cover each of the following broad areas based on your chosen company’s financial statements:

Prospective investors need information to predict a company's potential for success, profitability and dividends based on the profits estimated in statement of financial position in order for decision-making. Current investors are also interested on the estimated profits for the future in order to determine whether or not they should continue to invest in an organisation.

The main question of the study is how financially well the company is at the moment and what investment expectation it generates on the market nowdays.

Trend analysis reviews past data and tries to predict the future . A ratio analysis is a quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items in financial statements like the balance sheet, income statement and cash flow statement; the ratios of one item – or a combination of items - to another item or combination are then calculated. Ratio analysis is used to evaluate various aspects of a company’s operating and financial performance such as its efficiency, liquidity, profitability and solvency. The trend of these ratios over time is studied to check whether they are improving or deteriorating. (https://www.investopedia.com/terms/c/capitalization-ratios.asp)

Financial statements are used to determine the business activities of a firm and the role of accounting analysis is to determine the accuracy and quality of the information provided. This analysis would look into the degree of its accounting figures captures its business reality through the policies used and its resulting noise, potential forecast errors and its impact on Myer’s profit.

In addition to historical financial data, financial analysis must incorporate business intelligence into any review that is peripheral to the entity being assessed as well as forward looking. For instance, consideration should be given to general economic conditions at regional, national and international levels to ensure that analytical review procedures appropriately factor potential impacts (favourable or unfavourable) that may influence prospects for the firm, its region or sector.

In financial analysis, analysts use the financial data to monitor and evaluate a firm’s financial position, to plan the future financing, and to reallocate the size of the company and its rate of growth. Financial analysis involves examination of the historical data to achieve the information about the current and future the financial health of the company. They may work in the forecasting and profit analysis. They, like the accountants, prepare the reports. They prepare budget report, work in cost and general account. They analyze the changes in production and service to determine the effects on costs. They work on the graphs. They use statistic to compare the standard costs to the actual costs. They also study the significances of alternative ways of investing money in a particular field. They usually work for the large financial institutions. Particularly, they work

3. An analysis of stock market conditions including recent returns on stock market indexes and average valuation ratios such as P/E ratios of stock market indexes.

For the purpose of evaluation, there are some financial ratios which are calculated and the analysis of the results shows the performance of the company over the years. Financial analysis is the evaluation and interpretation of the financial data. This analysis is important for investment and financial decision making. This financial can be internal to the company for check and balance and for the measurement of the employees performances. This financial ratio calculation

2. Select a firm that competes in an industry in which you are interested. Drawing upon published financial reports, complete a financial ratio analysis. Based on changes over time and a comparison with industry norms, evaluate the firm’s strengths and weaknesses in terms of its financial position.

Financial analysis is the examination of pecuniary and financial information to accomplish the companies’ commitment. This investigation resolves the migration of organizations’ possessions, to explicate external and internal operations (Berman & Knight, 2012, p 38). This just says, a way to gauge an organization achieved and failed operations. In this logic, one may agrees that a financial analysis appraises businesses’ operating effectiveness, liquidity, and capital structure.

have explained that the Financial statements provide asummarized view of the financial position and operations of a firm. Therefore, much can belearnt about a firm from a careful examination of its financial statements as invaluabledocuments / performance reports. The analysis of financial statements is, thus, an important aidto financial analysis.