Identify a company that you would like to invest in. If you were planning to invest...

Identify a company that you would like to invest in. If you were planning to invest in this particular company, which of the three types of financial statements would you most want to see? Why?

Expert Solution

Three types of Financial analysis are

1. Ratio analysis:
The Ratios like Profitability ratios, Liquidity ratios, activity ratios, Debt Ratios,P/E ratio etc can help in identifying the performance of nay company. However these ratios are meaningful only when compared with the industry benchmark. It also pinpoints the area of concern for a company.

2. Horizontal and Vertical Analysis: Horizontal Analysis is comparing the financial statements over a period of time and analyzing whether a company is improving or performing poorly with respect to previous years.
Vertical analysis is converting all items in balance sheet in proportion to total assets and all items in income statement to sales.This helps in identifying the assets as proportion to total assets.

3. Technical Analysis : It focuses on the trend line or historical data to forecast or predict the future performance of company without any qualitative inputs.It is based on historical trends

jeff jeffy answered 2 years ago

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