What do you mean by financial analysis? By definition, it means the process of having to evaluate businesses, budgets, and other matters that are simply related to finance transactions in order to determine their performance and level of suitability. This type of analysis is oftentimes used for analyzing whether a specific entity is considered stable, solvent, liquid, or profitable. This is in relation to having to warrant a monetary investment.
Aside from that, it is also used to evaluate trends in economy, financial policies, long-term plans, and company projects that is essential for investments. That is why there is someone we call as a financial analyst who has the responsibility to examine financial statements whether it is a balance sheet, income statement, and cash flow statement. A financial analysis is said to be conducted both on the corporate finance and in investment finance settings. In this article, you will be able to know more about financial analysis and how to make a report for it.
10+ Financial Analysis Report Samples
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What is a Financial Analysis Report?
A financial analysis report has the capability to accentuate both the strengths and weaknesses of a particular company. You have to properly communicate to their strengths and weaknesses accurately and honestly as this will help you in convincing your potential investors to make an investment to your business. This report is a type of document that attracts the interests of the investors as it contains details showing a detailed appraisal regarding the financial health of a specific company.
How to Write a Financial Analysis Report?
- Start your report by writing an executive summary. You may also include the time period that is being focused by the study.
- Write an introduction that would emphasize the objectives of your report. Do not forget to put the definitions of the terms that are related to the objectives of the report.
- Go to the “resources” section and provide a description of the analyzed data. Example of a resource would be income statements, balance sheets, inventory ratios, warehouse statistics, and operating costs.
- Do mention whether the data you have has been received from different sources and provide an explanation to each of the source’s methods. You may also consider explaining about the method of accounting analysis for each of those reporting methods.
- Input “Significant Financial Events” and list down the events that happened during a specific period.
- Proceed into the “Detailed Results”. This is where you can find the comprehensive analysis of the investment returns, income statement, productivity ratios, and balance sheets. Include also factors that will help in providing a support for each of your statements like adding graphs and tables.
- In the “Analysis of Variance” section, provide an evaluation of the results.
- In the “Appendix” section, include section like “Financial Revenues” as it will help you in defining the terms that were being used for the preparation of the report. Also, make a tabulation of the revenues.
- You may end the report by writing your observations in which you are to discuss all the issues faced while you are performing the analysis. Include a statement that explains how a particular research method managed the issues. Lastly, include in the conclusion part a statement that tells about the projected future performance based on the previous performances.
What are the three key areas that you have to understand to effectively analyze a financial statement?
It includes the structure of the financial statements, economic characteristics of the industry in which a specific firm operates, and the strategies the firm pursues in order to differentiate itself from the others.
What are the types of financial analysis?
The types of financial analysis includes fundamental analysis and technical analysis.
What are some of the major sections to consider when writing a financial analysis report?
It includes the company overview, investment thesis, valuation, and key risks.
It is an essential process to know how you are going to prepare your financial analysis reports. With that, you can also take control of how you are going to present them. If you want to see more samples and format, check out some of the financial analysis report samples and templates provided in the article for your reference.
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