Foundational Overview of Financial Analysis Methods PPT

This PPT slide, part of the 22-slide Financial Ratios (Comparables) Analysis PowerPoint presentation, titled "Financial analysis – Introduction" provides a foundational overview of financial analysis, emphasizing its purpose and methodologies. It outlines that financial analysis involves examining a company's financial performance over time and in relation to its peers. The text highlights the importance of understanding how companies create value and identifies potential problem areas within a company. This analysis can be conducted internally or externally, allowing for a comprehensive view of a company's standing relative to competitors.

The slide is structured into 2 main sections: "Inputs to Financial Analysis" and "Dimensions of Financial Analysis." The inputs include 3 critical financial statements: the Balance Sheet, the Profit and Loss (P&L) Account, and the Cash Flow Statement. Each of these documents serves as a vital source of data for conducting thorough financial assessments.

Under "Dimensions of Financial Analysis," the slide details 2 primary approaches: Ratio/Trends Analysis and Cost Structure Analysis. The Ratio/Trends Analysis focuses on evaluating key financial metrics such as revenues, profits, costs, capital structure, asset base, and cash flow. This method is essential for assessing the evolution of a firm's financial health and identifying specific financial characteristics. Cost Structure Analysis complements this by providing insights into how costs are allocated within the organization.

Overall, the slide presents a clear framework for understanding financial analysis, making it a valuable resource for executives looking to deepen their understanding of financial performance metrics and their implications for strategic decision-making.

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Financial Analysis M&A (Mergers & Acquisitions) Profit and Loss Capital Structure Purpose