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Analysis and Interpretation of Financial Statement as a managerial tool for Decision Making - Dissertation Example

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The present research represents the analysis of the organisation`s financial statement in a duration of one and a half month. It would involve interviewing the relevant personnel and while others in finance related field will be provided with questionnaires to fill in…
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Analysis and Interpretation of Financial Statement as a managerial tool for Decision Making
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Download file to see previous pages Mostly, accounting tools are the most effective in decision-making process and gives a good benchmarking to datum. To analyze financial position of the firm, the leader of the corporate analyses its balance sheet, this gives the statement regarding the financial position and a gauge to the solidness in economic performance. Moreover, they may get these trends through an analysis of the profit and loss statements-income statements. It gives them a critical decision making tool which determines how effective will their short term and long term transactions in the long run determine the company`s profit potential. Moreover, they may analyze the cash flow of the firm because it will help them to comprehend the cash inflow of the company, out flows and how payments are made in relation to liquidity of the organization. Mostly, it will analyze the operating activities, investments, and financing cash flows. Actually, this will help the management to determine the amount of losses a business incurs. Lastly, from the firm`s equity cash flow analysis, corporate managers will help in knowing the capital structures of the firm and how it is related to the performance of the business. In fact, capital structure will indicate the various sources of funds in line with long term and short term operating activities. Hence, the managers may end up reorganizing some initiating activities such as acquisition and mergers. Moreover, they may get to comprehend other sources of funds like internal funding and retained earning, common or preferred stocks, consequently, they will have helped the management to establish adequate dividend for payments in each share and still keep the company`s state healthy. Literature Review In this...

Through the process of analyzing financial statements, the will be determination on adequate information regarding the financial sources and the obligations they bring to the firm. Additionally, it will give a detailed account of and reliable information regarding the financial performance of the firm, which includes how sound, is the finances of the firm. In addition, it will give enough information on from the results of business operations in the time range given. Besides, useful information concerning the financial condition of the business like how it involves movement of resources to and from its business will be derived. Lastly, it will give the information that will be helpful in giving an evaluation of the performance earnings from the invested resources and hence the managerial ability to forecast will be made stronger leading to an over all improvement in business.
Research Methodology

These include what can be achieved. It therefore includes the following.
1. Interviewing the finance department
2. Distributing questionnaires among other working members in this organization in different departments for them to fill in
3. Interviewing and distributing questionnaires to those supplying raw materials and those buying the firm`s product.
4. Testing the various software and hardware on their compatibility to the current working conditions of the firm
5. Reviewing the former statement of finance and writing a report over the same.

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