Analysis Flashcards
1
Q
What is financial analysis?
A
A tool to evaluate a company’s performance by comparing its accounts with those of
- previous years
- plans and targets
- other companies
2
Q
Comparators if analysis?
A
Internal - trends within own figures. Targets, what was intended vs actual results
External - similar companies (direct competitors)
Industry advantage - inter-firm comparisons
3
Q
Different tools of analysis?
A
Horizontal analysis
Trend analysis
Vertical analysis
Ratio analysis
4
Q
What is horizontal analysis?
A
Comparison with previous years figures
5
Q
What is trend analysis?
A
Comparison of figures over longer period of time
6
Q
What is vertical analysis?
A
Breakdown of figures within a balance sheet or income statement
7
Q
What is ratio analysis?
A
Using two figures within the accounts to create a ratio
