a) According to the material used, the analysis can be –
i) External analysis :
Where analysis is done by external interested parties and
ii) Internal analysis :
Where analysis is done by internal parties
b) According to the modus operandi of the analysis, the analysis can be –
i)Horizontal analysis : Where each single item in the statement is analysed over a no of years, so that its trend is known and
ii) Vertical analysis : Where various items in a specific year’s statement are analysed so that inter relationships are understood.
TOOLS AND TECHNIQUES OF FINANCIAL STATEMENT ANALYSIS
There are around five techniques of analyzing the Financial Statements. They are :
1. Comparative Financial Statements
1. Common size Financial Statements
2. Trend Analysis
3. Ratio Analysis
4. Funds Flow and Cash Flow Analysis
i) External analysis :
Where analysis is done by external interested parties and
ii) Internal analysis :
Where analysis is done by internal parties
b) According to the modus operandi of the analysis, the analysis can be –
i)Horizontal analysis : Where each single item in the statement is analysed over a no of years, so that its trend is known and
ii) Vertical analysis : Where various items in a specific year’s statement are analysed so that inter relationships are understood.
TOOLS AND TECHNIQUES OF FINANCIAL STATEMENT ANALYSIS
There are around five techniques of analyzing the Financial Statements. They are :
1. Comparative Financial Statements
1. Common size Financial Statements
2. Trend Analysis
3. Ratio Analysis
4. Funds Flow and Cash Flow Analysis
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