Financial Analysis Essay

9047 Words Jan 5th, 2016 37 Pages
1.0 INTRODUCTION
Financial Statement Analysis is an analysis which highlights important relationships between items in the financial statements. Financial Statement analysis embraces the methods used in assessing and interpreting the results of past performance and current financial position as they relate to particular factors of interest in investment decisions. It is an important means of assessing past performance and in forecasting and planning future performance. The major objectives of financial statement analysis are to provide decision makers information about a business enterprise for use in decision-making. Users of financial statement information are the decision makers concerned with evaluating the economic situation of the
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Financial statement is a formerly record of financial activities of a business or personal statement. Financial statement provides us a very clear profit and loss statement. It’s a summary of income and expenses of a business during a period of time.
2.0 PURPOSE OF THE REPORT
This report will financially compare Dutch Lady and Nestle by using financial analysis of the Balance sheet and Income Statements of each company. From this report, it will give recommendation on the company for investment and credit purpose. A method of financial statement analysis in which each entry for each of the three major categories of account (assets, liabilities and equities) in balance sheet is represented as a proportion of the total account. In this report, we used three methods for financial analysis which are vertical analysis, horizontal analysis and financial ratio.
Vertical analysis reports each amount on a financial statement as percentage of another item. The restated amounts from the vertical analysis of the balance sheet will be presented as a common size balance sheet. A common size balance sheet allows us to compare the first company’s balance sheet to another company’s balance sheet to another company’s balance sheet or to the average for its industry. Vertical analysis of an income statement results in every income statement amount being presented as a percentage of…

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