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    AFM Unit II

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    fhq54148
    This document provides an overview of various financial analysis techniques taught in an MBA accounting course, including common size analysis, comparative analysis, trend analysis, ratio analysis, DuPont analysis, and cash flow statement analysis. These techniques allow students to evaluate the financial stability, profitability, and performance of companies over time and in comparison to peers. The document defines each technique and provides examples of the types of insights that can be gained from their application.

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    AFM Unit II

    Uploaded by

    fhq54148
    18 views19 pages
    This document provides an overview of various financial analysis techniques taught in an MBA accounting course, including common size analysis, comparative analysis, trend analysis, ratio analysis, DuPont analysis, and cash flow statement analysis. These techniques allow students to evaluate the financial stability, profitability, and performance of companies over time and in comparison to peers. The document defines each technique and provides examples of the types of insights that can be gained from their application.

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    This document provides an overview of various financial analysis techniques taught in an MBA accounting course, including common size analysis, comparative analysis, trend analysis, ratio analysis, DuPont analysis, and cash flow statement analysis. These techniques allow students to evaluate the financial stability, profitability, and performance of companies over time and in comparison to peers. The document defines each technique and provides examples of the types of insights that can be gained from their application.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    18 views19 pages

    AFM Unit II

    Uploaded by

    fhq54148
    This document provides an overview of various financial analysis techniques taught in an MBA accounting course, including common size analysis, comparative analysis, trend analysis, ratio analysis, DuPont analysis, and cash flow statement analysis. These techniques allow students to evaluate the financial stability, profitability, and performance of companies over time and in comparison to peers. The document defines each technique and provides examples of the types of insights that can be gained from their application.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 19

    Accounting For

    Managers
    MBA Sem 1

    Chirag Jain
    Assistant Professor
    Unit - 2
    • Financial Analysis
    • Types of Analysis
    • Common Size
    • Comparative
    • Trend Analysis
    • Ratio Analysis
    • DuPont Analysis
    • Cash Flow Statement
    • Inter and Intra firm comparison
    • Comparison with Industry
    Financial Analysis
    • Financial analysis is the method of reviewing companies, programs,
    expenditures, and other activities relevant to finance to assess their
    performance and appropriateness
    • Financial analysis is usually used to determine whether an enterprise
    is sufficiently stable, solvent, liquid, or competitive to warrant a
    monetary investment
    Types of Financial Analysis
    Common Size Statements
    • A common size financial statement displays items as a percentage of a
    common base figure
    • This type of financial statement allows for easy analysis between
    companies, or between periods, for the same company
    Comparative Financial Statements
    • Comparative statements or comparative financial statements are
    statements of financial position of a business at different periods
    • These statements help in determining the profitability of the business
    by comparing financial data from two or more accounting periods
    Trend Analysis
    • Trend Analysis is a statistical technique that tries to determine future
    movements of a given variable by analyzing historical trends
    • It is a method that aims to predict future behaviors by examining past
    ones
    • Trend analysis of financial statements helps information users to
    discern percentage changes over time in the selected data
    • For example, users can see whether a firm’s net profit is increasing,
    decreasing, or stable, or whether there are fluctuations over the years
    Ratio Analysis
    • Ratio analysis is a quantitative method of gaining insight into a
    company's liquidity, operational efficiency, and profitability by
    studying its financial statements such as the balance sheet and
    income statement
    • Ratio analysis is a cornerstone of fundamental equity analysis
    DuPont Analysis
    • The DuPont methodology (also known as the DuPont identification or
    DuPont model) is a model popularised by the DuPont Corporation for
    analysing fundamental results.
    • DuPont analysis is a useful technique to break down the different
    return on equity (ROE) generators.
    • The ROE decomposition helps investors to concentrate separately on
    key indicators of financial success to define strengths and
    weaknesses.
    Cash Flow Statement
    • A Cash Flow Statement (also called the Statement of Cash Flows)
    shows how much cash is generated and used during a given time
    period.
    • It is one of the main financial statements analysts use in building a
    three statement model.
    • The main categories found in a cash flow statement are (1) operating
    activities, (2) investing activities, and (3) financing activities of a
    company and are organized respectively.

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