chapter financial analysis 18 - acornlive.com（财务分析章18 - acornlive.com）.pdfVIP

Chapter 18 Financial Analysis Financial analysis The objective of financial statements is to provide information to all the users of these accounts to help them in their decision-making. Note that most users will only have access to published financial statements. Interpretation and analysis of financial statements involves identifying the users of the accounts, examining the information, analysing and reporting in a format which will give information for economic decision making. Types of users Investors look at the risk of their investment, profitability and future growth. Managers / employees have access to more information and will want to know the stability of the company and profitability. Creditors are interested in the liquidity, as they just want to be paid on time. Banks are interested in the performance and liquidity of organisations for lending purposes Government departments - have various uses. Other groups including the local community on green issues, jobs etc. 18.1 Analysing performance through ratios Ratios are an effective way of analysing the financial statements. A ratio is 2 figures compared to each other, and can either be in % terms or in absolute terms. When analysing performance through the use of ratios it is important to use comparisons. A single ratio is meaningless and is only of use when compared with other ratios, competitors, and over time. Ratio uses To compare results over a period of time To measure performance against other organisations To compare results with a target To compare against industry averages 1 Ratios can be grouped into 3 main areas: 1 Performan