When interpreting the data in the financial statements, comparisons should be made between related items, in the same statements on a given date or period, or over a series of years.
new-approach-to-the-application-of-financial-indicatorsPROBLEM STATEMENT
This evaluation includes the financial statements on the following analysis methods:
Horizontal Analysis and Vertical Analysis
The aforementioned variables are subject to possible errors made in the records and / or formulation of the financial statements.
OVERALL OBJECTIVE
Describe the general principles that govern the preparation, structure, analysis and interpretation of financial statements, as well as their application in decision-making and successful business management.
SPECIFIC GOAL
- Analysis of Financial Statements as a tool for management control and decision making in the company (Financial and Economic Situation).
- Know and understand the use of accounting and non-countable information such as studying the correct interpretation of the numerical data thus gathered in order to determine the trends and the coefficients obtained, considering their significance in the environment in which the companies operate and thus, take corrective actions needed by management
BACKGROUND
The purpose of this study is to conscientiously learn to become deeply familiar with the form, content and general principles that govern the preparation and structure of companies' financial statements, analyze the various items in the financial statements, both in their numerical representation (quantity), as well as their content (quality), establishing their reciprocal relationships to determine the situation of the company or institutions that originate them, and also, study the correct interpretation of the numerical data thus gathered with in order to determine the
trends and the ratios, indices and ratios obtained, considering their significance in the environment in which the aforementioned companies operate.
In this sense, it is necessary to bear in mind that for any interpretation of the financial statements the type of company, its economic structure, its size, the economic activity to which it is dedicated, the volume of its operations, the products that commercializes in its market and others.
The analysis of the financial statements is a study of the relationships that exist between the various elements that make up the two important financial statements: balance sheet and income statement, belonging to the same financial year as well as the trends of its elements shown in a series of financial statements corresponding to various financial years.
THEORETICAL BASES
According to “Wikipedia”, financial indicators are relationships between figures extracted from the financial statements and other accounting reports of a company with the purpose of objectively reflecting its behavior.
Reflects, in numerical form, the behavior or performance of an entire organization or one of its parts. When compared to some reference level, the analysis of these indicators may be pointing out some deviation on which corrective or preventive actions may be taken depending on the case.
HYPOTHESIS
The Public Accountant, as a Professional Expert, can deduce concrete conclusions of a business applying a correct financial analysis. For this, it is necessary to analyze its commitments, resources and everything related to its financial management, to give a sure opinion that allows making decisions that facilitate the efficiency, effectiveness and economy of an entity.
THE ACCOUNTING PROCESS
FLOWCHART OF AN ACCOUNTING PROCESS
THE ACCOUNTING PROCESS
The Balance of Sums and Balances is a table taken from the General Ledger, which is made at least once a month, in order to verify if all the accounts registered in the Daily Ledger have been transferred to the General Ledger, correctly, with in order to verify the value of their balances, whether they are debtors, creditors or in any case, verify their equality.
THE DEBTOR ACCOUNTING PROCESS indicates that it has functioned more as an "APPLICATION OF RESOURCES" than an Origin or Source thereof. In the event that the account appears with a CREDIT BALANCE, it means the opposite, that is, that the company has functioned more as an “ORIGIN OR SOURCE OF RESOURCES”.
Thus what most characterizes an account as “Origin of Resources” or as typically “Application of Resources” is its “BALANCE”.
THE FINANCIAL STATEMENTS, ACCORDING TO IFRS 1
The statements predominantly extracted from the accounting books and records, clarified with additional annotations, where appropriate, showing the situation and the result of the management, during a certain period, of a company.
They are those final documents that show the economic and financial situation of a company. These documents expressed in tables or summaries are the result of the accounting process.
FINANCIAL STATEMENTS
The financial statements are conceived as a financial structure that supports the measurement of managerial decisions related to the investment and financing actions of a certain company.
Also, it allows to visualize in a given period or moment a position or composition of the management of the business binomial:
Investment - Financing
1. INVESTOR
2. CREDITORS
3. COMPANY
4. AUDITORS
5. STATUS
These users, interested in a company, want to know, among others, answers to the following questions:
• Is the credit situation favorable?
• Do you have the capacity to pay your short-term obligations?
• Do you have enough working capital?
• Is your financial structure proportionate?
• Is there excess investment in inventories and fixed assets?
• Do the profits obtained justify the invested capital?
• Is the company declining or progressing?
• What volume of production do you need so that the amount of your income is equal to the sum of your fixed and variable costs, without winning or losing?
• Do you comply with your legal obligations of labor, tax, etc.?
THE BALANCE SHEET
By grouping its elements, it is possible to define antecedents of vital importance in the analysis of a company such as working capital and the level of debt and liquidity, among others.
The balance sheet is the document that shows in figures, the result of the company's operations at a given time.
ACTIVE
Represents the set of assets and property values of the company and its degree of completion.
It details the uses made in material goods and other financial applications made in its activity. That is, it indicates how the Company used the "money" or resources that were provided by the financial sources.
In summary, the assets of a company are made up of all its resources (assets and rights) as of a certain date, such as the money it owns, merchandise, furniture, documents and invoices receivable, etc.
In accordance with the provisions of IFRS, in its initial section referring to the “conceptual framework for the preparation and presentation of financial statements”, in its paragraph regarding ASSETS:
"An asset is a resource controlled by the entity as a result of past events, from which the entity expects to obtain economic benefits in the future."
FUNDAMENTAL ACCOUNTS OF THE BALANCE SHEET
FUNDAMENTAL ASSETS ACCOUNTS
This name is given to a group of basic accounts that represent the Resources (Assets) of a company.
In consideration of Resolution No. 173/04 dated June 10, 2004, it establishes tables to present of the 4 financial statements and provides certain fundamental accounts that are part of the asset, which we quote below:
• Availabilities.
• Temporary Investments.
• Credits (Short and Long Term).
• Inventories.
• Advances.
• Unearned Expenses.
• Property, Plant and Equipment.
• Intangible Assets.
It represents the obligations, commitments or debts contracted by the Company and their degree of enforceability, that is, according to their maturity.
Indicates the money that the financial sources (third parties) have provided to the Company.
In summary, the liability is made up of all the debts and obligations contracted by the Company, as of a certain date, such as invoices payable, promissory notes, vouchers, etc.
PASSIVE
In accordance with the provisions of IFRS, in its initial section referring to the “conceptual framework for the preparation and presentation of financial statements,” in its paragraph regarding LIABILITIES:
"A liability is a present obligation of the entity, arisen as a result of past events, at the maturity of which, and to cancel it, the entity expects to dispose of resources that incorporate economic benefits."
FUNDAMENTAL ACCOUNTS OF THE BALANCE SHEET
FUNDAMENTAL ACCOUNTS OF LIABILITIES
Understanding that the liability is the set of debts or obligations, the need arises to know how to classify the aforementioned obligations, so that in a process of analysis the nature of each of them is not distorted.
Applying the criteria and model established by Resolution No. 173/04 of the Ministry of Finance, for the Liability it establishes the following:
• Current Liabilities:
- Accounts Payable.
- Financial loans.
- Provisions.
- Other passives.
- Deferred Earnings.
• Non-current Liabilities:
- Financial Loans (Long Term).
- Forecasts
Also known as Stockholders' Equity, it is the difference between ASSETS and LIABILITIES.
Represents the initial contribution made by the owners of a company, added later on by future capitalizations and distributions.
Net Equity is also known as Non-Claimable Liability, whose own financing source or also called own resources are made available to the company, with an enduring character and a lower degree of enforceability.
NET EQUITY
In accordance with the provisions of IFRS, in its initial section referring to the “conceptual framework for the preparation and presentation of financial statements”, in its paragraph referring to NET EQUITY:
“Net equity is the residual part of the entity's assets, once all your liabilities have been deducted ”.
FUNDAMENTAL ACCOUNTS OF THE BALANCE SHEET
Considered as the difference between Assets and Liabilities, it is necessary to initially identify Net Equity, as the element that allows measuring the participation of the owners within their own company.
Applying the model established by the Resolution
N ° 173/04 dated June 10, 2004, for Net Equity determines the following:
• Capital.
• Bookings.
• Results.
THE STATEMENT OF INCOME
The STATEMENT OF INCOME discloses the causes that gave rise to the Gains or Losses of a given financial year.
The INCOME STATEMENT measures the economic situation, the Return in relation to the Invested Capitals.
THE REGISTRATION OF THE INCOME ACCOUNTS
FUNDAMENTAL ACCOUNTS OF THE INCOME STATEMENT
These are the representative accounts of the INCOME and the
EXPENSES (Costs or Expenses); and consequently, they serve to determine the profit or loss resulting from exploitation.
FUNDAMENTAL ACCOUNTS OF THE INCOME STATEMENT
The accounts that are part of the Income Statement, are also called Nominal Accounts and refer to the items that are
representative of the object of exploitation or business branch, therefore, in the accounting books, have a temporary existence or "Nominal "; since they are “closed” at the end of each exercise.
DISTRIBUTION OF INCOME AND EXPENSES
Through this table, companies demonstrate their negative or positive performance. It reflects the economic situation of the company in an accounting period.
It serves to show the total income, as well as the expenses that the company has accumulated in a certain period.
This Financial Statement, apart from measuring the economic situation, has as its primary purpose, the final statement or net profit for the year.
Utility that serves as much as for distribution among shareholders; payment of income tax.
CONCEPT OF THE ANALYSIS OF THE FINANCIAL STATEMENTS
The numerical analysis of the financial statements consists of the study of the relationships that exist between the different items shown in the respective statements.
CONCEPT OF THE ANALYSIS OF THE FINANCIAL STATEMENTS
The general aspects of the analyzes are reduced to establishing the interpretation of two important situations: The Financial Situation and the Economic Situation.
FINANCIAL SITUATION
It consists of verifying if the company has distributed its assets and liabilities in such a way that they allow it to timely fulfill the payment of its obligations and commitments.
Consequently, it will also establish whether their own capital is related to the foreign capital and whether both, or at least, the latter are duly supported.
THE ECONOMIC SITUATION
It consists of seeing if the company pays enough
(if it is profitable) to justify the investment of its own capital.
METHODS FOR ANALYZING THE FINANCIAL STATEMENTS
The application of the methods have the objective of measuring the financial situation of the company. For the analysis of the financial statements, they are commonly known, the application of two methods: Vertical Analysis Method and
Horizontal Analysis Method
METHODS FOR FINANCIAL ANALYSIS
METHOD FOR VERTICAL ANALYSIS
Through this method, the relationships between the elements contained in a single group of financial statements are studied, using for this purpose:
- Method of Integral Percentages and
- Method of Ratios, Coefficients or Ratios
VERTICAL ANALYSIS
METHOD PERCENTAGE METHOD
It is the method by which the figures or figures are translated, to the percentage, in order to compare or relate the elements to the whole.
It consists of obtaining the percentages of each of the items in the financial statements (Balance Sheet and Income Statement), with respect to a base figure
VERTICAL ANALYSIS
METHOD PERCENTAGE METHOD IN THE BALANCE SHEET
The total assets would be 100% and the total Liabilities and Net Equity would be 100%
VERTICAL ANALYSIS
METHOD PERCENTAGE METHOD IN THE BALANCE SHEET
The total assets would be 100% and the total Liabilities and Equity would be 100%
VERTICAL ANALYSIS
METHOD PERCENTAGE METHOD IN THE INCOME STATEMENT
The base figure is that of Net Sales, which can be obtained with the following relationship: “the% of an account is equal to the partial figure over the base figure x 100 ”
VERTICAL ANALYSIS
METHOD METHOD OF COCIENTS, REASONS OR RATIOS
This method is based on the relationships between various elements that occur in the financial statements.
The indices or ratios are numerical quotients that measure the relationship that exists between certain accounts in the companies' financial statements, whether taken individually or grouped by sector or size.
HORIZONTAL ANALYSIS METHOD
Through this method, the relationships between the elements contained in two or more groups of financial statements of
successive periods are studied, using the following methods:
- Increase and Decrease Method; and
- Trend Method
HORIZONTAL ANALYSIS
METHOD INCREASE AND DECREASE METHOD
The basis of this method is the comparison of the financial statements (Balance Sheet and Income Statement) of the same gender, but corresponding to two exercises.
Such comparisons are carried out through the formulation of comparative statements that allow to know the changes in the
company from one period to another and thus facilitate their study.
HORIZONTAL ANALYSIS
METHOD INCREASE AND DECREASE METHOD
In the example, in the Availabilities item, during the 2013 financial year, in relation to 2012, it increased by Gs. 150,000,000, equivalent to 100%.
HORIZONTAL ANALYSIS
METHOD TREND METHOD
Arisen as a complement to the method of "Increases and Decreases" in order to be able to make comparisons in more than two periods, since it may happen that one of these corresponds to abnormal situations in which case incorrect conclusions would be obtained.
By means of this method, the comparison is made as a basis for a certain economic cycle and comparing with that cycle, the previous and subsequent ones, in order to extract or achieve the variations that it has undergone
in a certain economic event.
HORIZONTAL ANALYSIS
METHOD TREND METHOD
For example, obtain the variations in availabilities during the years 2013, 2012 and 2011:
Appreciations:
- We use the year 2011 as a base, considering 100%, on which we make the comparisons for the years 2012 and 2013.
- Thus, in 2012, the availabilities have suffered a negative variation equivalent to 25%, in relation to the year base, but the year 2013, has deserved an increase of 50% over the same base year.
INCREASE METHOD AND DECREASES AND TRENDS
APPRECIATIONS
This analysis allows us to appreciate the variations of each of the items in the balance sheet, taking into account the financial years 2013 and 2012. For this effect, when finding the aforementioned positive or negative variations, the percentage that affects the aforementioned variation (known as “trends”), measured in relation to the base year (Year 2012).
Current Assets Analysis:
Regarding availabilities, we can see that it had a negative variation resulting from Gs. 20,277, which with respect to the base year 2012, represents 4.55%.
Sales credits had a positive variation with respect to the previous base year 2012, which resulted in Gs. 296,678 representing 132.61%
The other current assets items had positive variations, the most notable being inventories, in Gs. 157,520, which compared to the previous year 2012 represents 23.34% respectively.
Analysis of Non-current Assets:
The most notable of the items that make up these assets are allocated to fixed assets, which were increased by 23.46%, compared to 2012
INDEX METHOD, QUANTITIES OR RATIOS
This method consists of relating some groups of accounts with others, according to what is sought, placing the sum of some as a numerator and the sum of others as a denominator, so that the result of the division or quotient indicates a measure that will mean situation
good, fair or poor, in each case.
• Balance Sheet and
• Income Statement
In order to develop the interpretation of this study (or method), percentages are applied to the totals, to give greater emphasis to the results of this evaluation over the total economic and financial resources of the company.
These indices are of a great variety and represent the relationship that exists between certain companies' financial statements accounts, whether taken individually or grouped by sector or size, that is, according to the economic activity of the company subject to analysis.
INDEX METHOD, QUANTITIES OR RATIOS
1) Analysis of liquidity
2) Analysis of solvency or Leverage
3) Analysis of profitability
4) Analysis of Efficiency, Circulation or
rotation of securities
These indices are used in the evaluation of companies and business management, that is, they reflect the situation of the company, the efficiency with which they have carried out their operations and the degree of correction with which they have managed their resources.
Liquidity and Solvency Indices Balance Sheet
Profitability and Management Indices (Rotation) Income Statement
I) LIQUIDITY ANALYSIS
MEASURES THE PAYMENT CAPACITY OF COMPANIES
Liquidity, in general terms, is understood as the power that assets and asset rights have, to transform into monetary values.
The Liquidity analysis arises from the need to measure the payment capacity that companies have to meet their obligations or commitments made in the short term (maximum one year)
a) Current Liquidity
b) Dry Liquidity
c) Absolute Liquidity
Measures the ability of the company, at all times, to settle its obligations with third parties, in the short term
a) Current Liquidity
Universal criteria indicate that the acceptable ratio (ideal or standard) it must be 2, interpreting it as the capacity that the company has of Gs. 2 to pay Gs.1 of debt.
a) Current Liquidity
This coefficient, unlike the previous one, differs in the Inventories item, making it more significant for determining liquidity.
That is, the ability to pay current obligations with liquid resources (Availabilities and Short-Term Credits), discounting their Inventories, to carry out their commitments in the short term.
It measures the "Resistance of Current Assets", more effectively against Liabilities.
This position takes into account the case that inventories or "stocks" cannot be sold, for this reason, it is of utmost importance for commercial and industrial companies, deserving special attention in their respective calculation.
Universal criteria indicate that the acceptable quotient (ideal or standard) must be 1, interpreting it as a ratio or coefficient equal to or greater than unity is considered satisfactory; since, the investment of the partners or owners of the company, in the liquid resources of the company must be at least equal to the investment of the creditors in such asset.
CURRENT LIQUIDITY AND DRY LIQUIDITY
The Current Liquidity and Acid or Dry Test Coefficients are useful for determining the
Dependence or not of the Foreign Capital. They serve to establish the financial position of a Commercial Company.
It relates to the Available only, as to cover its short-term obligations, at any given time.
The coefficient indicates the risk that there could be, in the event that the credits cannot be collected.
The analysis is subject to more or less long periods, previously considering the detailed analysis of short-term debts, however, universal criteria indicate that the acceptable ratio (ideal or standard) must be 0.10; interpreting it as a “financial buffer”.
FINANCIAL MATTRESS
Liquid or reserve fund that serves to cover eventual responsibilities.
It consists of wintering, without receiving a penny or without receiving anything.
THE WORKING CAPITAL OR WORKFUND
Working Capital = Current Assets - Short-Term Liabilities
Also called Net Rotation Fund, it is also considered another ratio of the company's liquidity.
Having sufficient working capital is a guarantee that the company has a certain financial stability, since it indicates the amount of current assets that is financed with permanent resources (that is, with long-term callable and own resources).
Likewise, it is not enough that the Working Capital is Positive but that the composition of current assets must be analyzed.
It could happen, for example, that the company has a very high Working Capital due to having a warehouse full of products that it is not capable of selling.
A company is solvent, when it can meet the payment of its obligations on the due date.
The analysis of solvency implies, the study of the relationships between a certain sector of the asset accounts with the homogeneous sector of the liability accounts, which include security and solidity of the securities to be received and with which to be able to attend on time, the commitments made
SOLIDITY
Solidity or Stability will be the complement of solvency. Stability means whether the company normally meets the demands of its debts or commitments, paying them in due time.
On the other hand, a company can be solvent, that is to say, be able to fulfill the payment of its obligations and yet it does not fulfill them, simply, due to the lack of ability to carry them out.
The purpose of this analysis is to measure the degree and the form of own and other people's capital, within the financing of the company. Supposes Backup.
It does not imply having money. "It does not satisfy the price rules or policies that the company has."
• FINANCIAL INDEPENDENCE: It is the degree of dependence on the Foreign Capital. That is, when the participation of the Foreign Capital (Liabilities) is less than that of the Own Capital (Equity). That is, to the extent that the NET EQUITY is 51% and TOTAL LIABILITIES is 49%.
• FINANCIAL DEPENDENCE: When the Foreign Capital is greater than the Own Capital. In this case, the one who owns the company is the creditors.
A company is considered solvent when it is able to meet its obligations with the product of the realization of its assets.
The degree of solvency of the company will be determined to the extent that the realization value of its assets exceeds the amount of its debts.
Therefore, it means the measurement of the participation of the financial sources, own and others, that concur of the total investment of the company
a) Debt Ratio: Assets (Independence or Financial Solvency)
b) Equity Ratio: Assets (Equity Solvency)
c) Long-term guarantee of third-party (or third-party) Capital.
II) ANALYSIS OF THE SOLVENCY OR LEVERAGE
a) Debt: Asset Ratio (Financial Independence)
It establishes the degree to which the total investments of the company depend on the financial sources provided by third parties, that is, it allows to appreciate the degree of participation of the Foreign Capital against the total invested in the company, or from another perspective, the participation of third parties to finance the total investments made by the company (degree of Dependency on Foreign Capital).
It also indicates the degree of protection and solvency that the company has against its short and long-term creditors.
a) Debt Ratio: Assets (Financial Independence)
b) Equity Ratio: Assets (Capital Solvency)
By means of this coefficient, the degree of equity participation can be obtained, in relation to the total invested in the company.
That is, the concurrence of the owners of the company, to finance the total investments made in their own business.
b) Equity: Active Relationship (Capital Solvency)
A company that is in a situation of more than 50% of the
Own Capital, is in better capacity to generate income, since it uses less Third-Party or Third-Party Capital and more Own Capital.
Therefore, it has less financial burdens.
II) ANALYSIS OF THE SOLVENCY OR LEVERAGE
c) Long Term Third Party Capital Guarantee
The Productivity or Profitability is given by the maintenance and increase of the results of the company (profits), to the owners, expressing qualitatively, both in its category, and in its regularity and trend.
The purpose of this analysis is to verify if the company's income is sufficient to meet or pay its obligations, from the point of view of what the company invested.
It would be the remuneration of the Invested Capitals in his own company.
Through this Analysis, in addition to knowing the degree of its liquidity, solvency and solidity, it is also necessary to know its profitability, since it will allow to remunerate the Capitals, Own or Outside, made available to the company
The Profitability is measured in function of the Income Generated and in function of the yield or contributions of Resources (Own and Outside) "You give me 1 Million, I have to return 1.5".
Like all the previous analyzes, their calculations deserve importance, because they will serve to measure the business's ability to generate the profits desired by its investors.
a) Net Profit Margin (Ratio of Net Profit to Net
Sales)
b) Return on Net Worth
c) Return on General Investment (on Assets)
Return ratios are a measure of the success or failure with which
your resources are being used.
a) Net Profit Margin
• Determines the relationship between the Net Income for the Fiscal Year, before the
Income Tax that has been obtained with that of the Net Sales made.
• This coefficient is the indicator of variations in sales prices and costs.
• A higher coefficient is an indicator that the sale prices are high or that the costs are relatively low and vice versa in the case of a low level coefficient.
• Depending on the branch of activity in which the company is located, a return equivalent to 25% is ideally universally acceptable.
b) Return on Equity
• Compare the Profit for the Year before Income Tax, with Net Equity, measures the productivity of the Company's Own Capital in relation to the Profit that its investments yield. A positive increase indicates increased funds.
• Unless evidence to the contrary, it could be considered acceptable from approximately 18%. • A negative coefficient is an indicator that the company's funds are fading.
c) Return on Total or General Investment
• The return on total investment will have the degree of importance assigned by the analyst, depending on the economic activity carried out by the company.
IV) ANALYSIS OF ROTATION OR EFFICIENCY
MEASURES THE EFFECTIVENESS WITH WHICH THE COMPANY USES THE RESOURCES AT ITS DISPOSAL
Through these analyzes, the speed or effectiveness of the rotation of elements whose structure requires greater flexibility to form assets of basic use is measured.
IV) ANALYSIS OF ROTATION OR EFFICIENCY
MEASURES THE EFFECTIVENESS WITH WHICH THE COMPANY USES THE RESOURCES AT ITS DISPOSAL
These Rotation Ratios measure the efficiency with which the company uses the resources at its disposal.
They require comparisons between the level of sales and the investments made in different Current Assets accounts.
a) Rotation of Clients (or average term of collection)
b) Rotation of Merchandise (or average term of inventories)
c) Rotation of Suppliers (or average term of payments)
• The “Collection Rotation Index”, known by other authors as “Credits Granted”, measures the turnover of accounts receivable and represents the average time that the company after making a sale, has to wait to receive the cash correspondent. That is to say, it measures the average number of days in which a company makes the collection
• By this reason the speed or return period of the loans assigned to customers is appreciated.
• It measures the average number of days that accounts receivable are in circulation, that is, the average time it takes to become cash.
• It shows the effectiveness of the Collections policy,
determining the return for Sales made on Credit (assigned to the customers).
• The degree of importance of this coefficient is subject to market conditions and the quality of products that the company markets.
• Also known as “Inventory Replenishment”, it measures the average time that Inventories are kept in the company's warehouses, becoming an important indicator of the way in which business assets are used
• Represents the number of times that the Inventory is converted into a more liquid Asset item, that is, in availabilities if the sale has been made in cash or on credit.
• This coefficient is a measure of efficiency in the sales and purchasing policy.
• The Average Inventory is obtained by adding the Initial Inventory plus the Final Inventory, dividing it by two
• Also known as “Credits Obtained”, the Supplier Rotation coefficient measures the speed or maturity of the credits received from creditors.
• Shows the company's ability to meet its suppliers.
• Measure the speed or maturity of credits received from suppliers for purchases made on credit.
• The position of this resulting coefficient determines the sufficiency or insufficiency of the Working Capital. It also determines the number of days that the company takes to cancel suppliers with liquid funds for purchases made on credit.
THE OPERATIONAL CYCLE OF A COMPANY
If there are benefits (profits), these allow to increase the volume or invest them in fixed assets.
ANALYSIS OF ROTATIONS
FINANCIAL INDICATORS REPORT
This table expresses a measurement of the results of the situation of the examined company, reflected by the financial statements
The analysis of the financial statements makes it possible to simplify or reduce the data that is examined in more understandable terms, after relating and interpreting them, knowing how the company is developing and forecasting for the future.
Although it is not possible to establish the structure of a model for the reports that give rise to the interpretation of the financial statements, it is evident that said documents must have a series of indispensable characteristics to achieve the proper completion of the analysis carried out.
Any report that is claimed to be correct must be expressed with the utmost clarity, with good wording, without redundancies and with precision in the conclusions derived from the analysis.
BIBLIOGRAPHY
- The Banks and the Analysis of the Financial Statements / CP Víctor Rivas Gómez - Ediciones Arita EIRL - 1996 - Lima, Peru
- Analysis of the Financial Statements and their Adjustments for Inflation / CP Alejandro Ferrer Quea - Editora Ital Perú SA - 1996 - Lima, Peru
- Regulation for the preparation of Financial Information / National Supervisory Commission of Companies and Securities - 1995 - Lima, Peru
- Financial Balance of Companies / CP Enrique Zamorano - Inst. Mexicano Contad. Públicos, AC - 1993 - México, DF
- Financial Analysis, with Adjustments for Inflation / Héctor Ortiz Anaya - Techno texts - 1993 - Colombia
- The Financial Statements: their Analysis and Interpretation / CP Alfredo Pérez Harris - Edic. Accountants and Administ. SA - 1990 - México, DF
- Introduction to Financial Administration. Helio de Paula Leite - Editora Atlas SA - 1982 - Sao Paulo, Brazil
- Financial Statements: Form, Analysis and Interpretation / Ph. D. Ralph Dale Kennedy - Unión Tipog. Editorial Hispano Americana - 1974 - México, DF
- Analysis and Interpretation of Balances / Dr. Francisco Cholvis - Selección Contable SA - 1973 - Buenos Aires, Argentina.
- INTERNET - Pages viewed: www.emagister.com; www.monografias.com; www.gestiopolis.com
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