Question

1. What is Financial Statement Analysis (FSA)?
2. How is FSA related to AND different from financial accounting and auditing?
3. What is a typical day in the life of a financial analyst?
4. How do you become a financial analyst? What professional licenses or education do you need or can you get?

Answer 1

Answer are as under :

1. What is Financial Statement Analysis (FSA)?

Financial statement analysis is process of understanding the viability , profitability and feasibility of the organization to which the financial statement belongs. In simple words it refers to doing SWOT analysis of the companies. A financial expert will analysis the companies financial statement to make decision , to report it to top level management, to grant the approval for loan, to under take the process of credit rating etc. It has various uses but it give the in-depth insight of the companies financial health. Financials statement analysis mainly consider profit and loss account, balance sheet, cash flow statement to get the result.

Financial statement analysis is useful to stakeholders such as investors, government , shareholders, creditors , debtors , employee , other external parties. While analyzing the financial statement, two years comparison of the data is done. Various ratio are used to understand the financial impact on the companies. It is helpful to evaluated the past, current and future position of the company . Data are available for last and current financial year and from its projected financial statements are prepared to understand and make decision for future.

Examples of financial statement analysis.

Suppose if Current assets of the company are $ 100000

Current liabilities of the company are $ 50000

Information is available that the company will required to pay some expenses of $ 10000 in next opening financial year

From above data it can be said that the companies current ratio is 2 and its current ration at the beinging of next financial year will be 1.42

It shows the companies ability to pay off its short term debt. When current ratio is 2 , it shows that companies is in very good position to meet its short term require dement

2. How is FSA related to AND different from financial accounting and auditing?

FSA , financial accounting and auditing are related as they all focus on financial matter and there end result is true and fair view of the organization financial position. All three are form in different way but they are inter related also. When financial accounting is completed, on the basis of it only financials statements are prepared. On the basis of financial statements prepared, auditors do auditing and analysis the result and get the final outcome from it.

Difference

Financial statement analysis is process of understanding the viability , profitability and feasibility of the organization to which the financial statement belongs. In simple words it refers to doing SWOT analysis of the companies. A financial expert will analysis the companies financial statement to make decision , to report it to top level management, to grant the approval for loan, to under take the process of credit rating etc. It has various uses but it give the in-depth insight of the companies financial health. Financials statement analysis mainly consider profit and loss account, balance sheet, cash flow statement to get the result.

While Financial accounting and auditing is a process of bookkeeping and accounting for preparation of financial statement. Once bookkeeping process is completed , accountant prepare financial statements as per the laid down rules and regulation and after that the process of auditing beings. Here accounts of the organization is prepared on the basis of certain rules and regulations to show the profitability or loss of the company.

Auditing is done by auditor to express audit opinion that whether financial of the companies are prepared in a manner which show true and fair view of the companies position. It is an activity of evaluation, reperfromance, verification , inquiry of the work perform by other. There can be various type of audit such as internal audit, tax audit, financial statement audit, statutory audit, bank audit etc

3. What is a typical day in the life of a financial analyst?

A life of financial analyst is full of figures, updates and hustle bustle. Every day financial analyst needs to keep themselves update with market news, new government policy etc. Also there work load depends on the number of year of experience in the field.

A typical day of financial analyst will be like :

In morning will get newspaper and read business news.

Will arrive at office, check mail, will start working on companies financial data

Analyst will gather all financial data from different sources and arrange the same in useable format. From this he able to get the idea about companies business, nature, and insight in the companies financial position. After gathering data in proper format, the analysis work get started.

4. How do you become a financial analyst? What professional licenses or education do you need or can you get?

Financial analyst is required to have Degree in finance such as MBA in finance, CA, CPA, CFA.

To become a financial analyst, you much peruse your carrier from commercial field and then get above degree. Being a financial analyst you much be aware with market strategy on day to day basis and be aware about the economic condition.