Financial Statement Analysis

Financial Statements are prepared by companies to demonstrate its financial activity to stakeholders. These are prepared at regular intervals, and typically contain at least a balance sheet and an income statement. The balance sheet shows the value of a company�s accounts at a given point in time. The income statement shows the financial effects of activities over a given period of time.

Analysis can be made in many ways. Financial Ratios can be used to understand and measure how well a company is doing in an area. Ratios can be used to compare one company against another, or one time period against another. Common size statements are used to compare different companies or time periods, as each line item is expressed as a ratio of another. Trend analysis is helpful to understand the change in a company�s financial statements from one period to another.