Custom «Financial Analysis» Essay Paper Sample
Financial condition usually assumes the ability of a company to finance its activities (Groves, 2003). Principles of financial condition are to allocate financial resources necessary for the healthy activities of the enterprise, place and use them appropriately and efficiently; secure financial relations of the company with other corporations and individuals, as well as assure solvency and financial stability of a business (Groves, 2003). Financial condition analysis includes the results of industrial, commercial and financial activities of the enterprise. If the production and financial plans implementation is successful, it has a positive impact on the financial status of the enterprise. Conversely, failure to perform production and sales plan is increasing product’s cost, consequently reducing the amount of revenues and profits, resulting in deterioration of the financial condition of the company as well as its solvency.
Financial statement is a report in the form of tables, and it reflects the movement of assets and liabilities, as well as demonstrates financial position of the company for the period. Financial reporting is a data system analyzing the company's financial position and financial results from operations of the business; it also shows changes in financial position of the company. Financial statement analysis bases upon the accounting data (Fridson, 2011).
The main purpose of financial statement is to provide information about the financial condition, results of operations and changes in financial condition of the company. Reporting should include information about the company's assets and liabilities, results of operations, events, and circumstances that change its assets and liabilities. A wide range of users making economics decisions consumes this information (Robinson & van Greuning, 2008). It should be noted that the tasks assigned to the financial statements in different accounting systems are the same. Investors, employees, creditors, suppliers, customers, government agencies, and other stakeholders may be potential users of financial statements’ analysis. However, all these users have different information needs.
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