A financial analysis paper details a company's financial health. While the company's history, financial statements and stock performance can all summarize different aspects of its financial performance, the financial analysis paper incorporates all of these details and more into a comprehensive and coherent form. Lenders, investors and financial analysts examine the financial analysis paper to determine if a company can deliver a solid return on investment.
The executive summary section includes the most important findings from the financial analysis in a concise, easy-to-read format. The summary encapsulates the data presented in the rest of the report, including the implications those data have on the industry in general and the company in particular. This section can include brief summaries of the company's mission, history, current performance and anticipated outlook. This section also includes a summary of the company's industry, competition and market conditions.
The core of the financial analysis paper is the collection of the company's financial statements. These include the balance sheet, income statement, equity statement and cash flow statement. The balance sheet shows the company's allocations of assets, liabilities and shareholders' equity. The income statement shows the company's revenues, expenses and profits or losses. The equity statement shows changes in the amount of shareholders' equity. The cash flow statement shows where the company obtained its cash and how it spent it.
No company exists in a vacuum, so a financial analysis paper must include an examination of the company's industry. The report will include comparisons between the company's financial health and that of its competitors, and it will report the company's market share and prominence in the industry. These factors help investors determine if the company is competitive in its industry and would make a profitable investment.
Financial ratios can reveal such aspects as a company's liquidity, debt load and efficiency. The current liquidity ratio is the ratio of the company's current assets to its current liabilities. The debt ratio is the ratio of the company's total debt to its total equity. The return on equity ratio weighs a company's profits against its shareholders' equity. The price to earnings ratio can be found by dividing the current market price per share by the after-tax earnings per share.
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