What is the purpose of financial statement analysis? What are some of the tools that we can use to analyze financial performance? What should we use to benchmark our performance? Why?
What are the differences between financial and managerial accounting? Why does financial accounting have to comply with GAAP, but managerial does not? What types of decisions can be made using financial accounting information? What types of decisions can be made using managerial accounting? Define, explain, give examples.
//The given discussion paper is based on the 'Financial Statement Analysis'. In this paper, we will talk about the purpose of financial statement analysis, tools to analyze the financial performance and benchmarking. So, we will gain information regarding the analysis.//
Purpose of the Financial Statement Analysis:
The analysis of Financial Statements is a systematic process through which the financial statements are analyzed in order to get a better view of a Company's position and performance. Financial statements help to bring forth the actual results of the company's operations over a specific period of time in order to estimate its worth at a particular date. Analysis of financial statement helps in the determination of the financial condition of a company. Financial Statement Analysis is done to predict the company's performance. It helps in comparing the company with the competitor. It helps to determine the liquidity position of the company which can be used by the investors while making an investing decision (Shim & Siegel, 2000). It helps the management to determine the operational efficiency. It enables a firm to know its overall profitability.
Tools Used to Analyze the Financial Performance:
Various tools are used to analyze the financial performance of the Company. These tools are given below:
Ratio Analysis: Ratio Analysis consists of the following:
A) Comparative ...
This solution clearly outlines the differences between Financial and Managerial Accounting and the relation of both of these activities to GAAP in 654 words. References are also included at the end of this discussion.