Financial Analysis Assignment

Financial Analysis Assignment-73
Financial analysis are evaluation of a business’s financial performance and as reference to guide the owners doing future financial plan by using own previous and current accounting record or compare with competitor.

Financial analysis are evaluation of a business’s financial performance and as reference to guide the owners doing future financial plan by using own previous and current accounting record or compare with competitor.

Using past data to forecast future performing may be not realistic because the uncertainty in future business environment did not bring out similar performance with the expectation.

The analysis only shows the result of performance, but did not shows us the factors that lead to those result.

Limitation The financial analysis refer to quantitative factors are lack of reliability because the good or bad of a company are also affected by qualitative factors such as reputation and management.

It does not show the whole picture of all factors that influence the business condition.

The business face with difficulty to anticipate when they can get payment from debtors and whether the amount of debts owe by other will increase.

The assessment of credit risk should refer to updated financial statement to avoid from mistakes in analysis.

When analyse with data for several years such as 5 years, the short-term data only tell us the possible trend at the period.

The trends in 1990s are dissimilar to trend in 2000s.

The external or internal environment such as economy condition, industry advancement, company’s operation or consumer preferences are uncertain and difficult to show in the minor part of analysis.

For instance, the analysis did not reflect the reputation of the business.

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