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A to Z of Financial Statement Analysis

Complete A to Z of Financial Statement Analysis for Your Assignment

30 Dec 2023

6 minutes


If you are here, then you undoubtedly are a finance student. And like most students, you would also be facing trouble with financial statement analysis, right? If this is true, then you surely should avail financial statement analysis assignment help from Instant Assignment Help. This is because we provide the best services.

But, to make things easy, our experts have come up with this blog. It comprises everything a student should know about financial statement analysis before writing an assignment. So, let’s get going to know about this in detail.

What Is a Financial Statement?

To begin with, let’s look into what finance is. It is basically a subject that deals with money management of government or large companies. And the financial statements are the reports that a company’s management prepares to evaluate its position and performance at one particular point.

This evaluation helps the management in taking following decisions:

  • To invest or lend capital or not.
  • To negotiate or not for a bank loan.
  • To issue stocks or not for increasing the capital.
  • To rent or implement any machinery.
  • To continue or discontinue any operation or part of it.
  • To use or purchase a particular item for the manufacturing process.

So, by this, we can get an idea that financial statements are the main source of information for taking any decision. Now, there are mainly four types of financial statements that are explained below.

Balance sheets

This is what provides detailed information about a company’s assets, liabilities and stakeholder’s equity. Now, if you are unaware of these financial terms, then have a look at the last section of this blog.

Income statements

This is what shows the revenue earned by the company in a particular time period. This shows details of all the costs and expenses that are related to the earned revenue.

Cash flow statements

This tells about a company’s cash inflow and outflow. This is used to analyze and maintain enough cash in the company to pay for expenses and make purchase of assets.

Statements of stakeholder’s equity

This is a document attached to the company’s balance sheet. It includes details of any changes made to stakeholders’ equity or ownership of the company. This includes the details from the beginning of the financial accounting period to its end.

What is Financial statement analysis?

This is a process in which we analyze a company’s financial statements. These statements help in decision making for the company. It comprises reviewing and analyzing a company’s financial statements to make better decisions in the future for earning better income in future.

This provides information about a company which comprises the financial position, profits, operating, investments and other such financial activities of that particular company.

What are the different methods of financial statement analysis?

Financial ratio analysis is used to perform financial statement analysis. Here are some popular financial ratios that are used for preparing a financial statement.

Profitability ratio = Gross profit net sales
Profit margin = net profit net sales
Current liquidity ratio = current assets current liabilities
Quick liquidity ratio = (current assets - inventory) / current liabilities
Debt ratio = total liabilities total assets
Earnings per share = net earnings per share
Dividend cover = earnings per share dividend per share

These are the most popular financial ratios that are used for preparing financial statements.

Let’s take a look at some financial terms that are used for financial statement analysis assignment:


These are the things that are owned by the company. These include both physical and non-physical elements that hold any value. This includes cash, machines, plants, vehicles, patents, investments, etc.


This is the amount of money the company owes to others. This includes all kinds of money that have to be paid back to anyone. This comprises loans from banks, rent for the property, payroll for employees, taxes to be paid for the government and other such.

Shareholders’ equity

This is the money that the company would be left with after selling all its assets and paying off all the liabilities. The then left money would belong to the owners, aka shareholders of the company and is known as the shareholders’ equity.

Now, this was all about financial statement analysis that you can include in your assignment. But, if you are still having any trouble with it, you can avail our financial statement analysis assignment help.

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