Financial Statement Analysis - Essay Example

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Financial statement analysis is an aspect of the business finance function and entails the act of examining financial information to gain an understanding of the current and future financial health of an entity. By understanding the financial data, the management can make…
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Financial Statement Analysis
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Download file to see previous pages The companies selected for this by this essay for this analysis are the Nishat Mills Limited and the Crescent Textile Mills Limited. The incorporation of Crescent Textile Mills Limited as a public limited company was done in 1950 in Pakistan under the Companies Act of 1913. It is headquartered in Sargodha Road, Faisalabad. Its business is to textile manufacturing and includes spinning, combing, dyeing, bleaching, printing, weaving, stitching, selling buying, and otherwise dealing in cloth, yarn and other products and fabrics made from raw cotton as well as synthetic fibers (The Financial Times Ltd, 2015). In addition, it generates, accumulates, distributes, supplies and sells electricity. The Crescent Textile Mills Limited also operates a cold storage unit (Crescent Textile Mills Limited, 2013, p. 37).
As a publicly listed company, Nishat Mills Limited was also incorporated in Pakistan in 1959 under the Companies Act of 1913 (Nishat Mills Ltd, 2013, p. 54). It is a vertically integrated company and just like Crescent Textile Mills Limited, its business involves textile manufacturing, spinning, combing, weaving, dyeing, printing, stitching, bleaching, apparel, buying, selling, dealing in yarn, cloth, linen, and other products and fabrics made from synthetic fiber and raw cotton. It also generates, accumulates, distributes, supplies and sells electricity (The Financial Times Ltd, 2015).
Trend analysis is done by conducting horizontal and vertical analysis. The horizontal analysis is performed to focus on the trends or changes in financial statement items. The management and other users of financial information can see the relative changes over time in terms of positive and perhaps troubling trends (Putra, 2009). In performing this analysis, absolute amount as well as percentages is used to compare financial statements over several time periods ...Download file to see next pagesRead More
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