William Letzer- What Is Financial Statement Analysis?

According to Accounting Tools, financial statement analysis involves reviewing the financial statements of a corporation to realize an understanding of its financial situation. Financial statements usually include a record, earnings report, statement of money flows and supplementary notes. An internal analysis is conducted by employees, executives, government agencies or other individuals with access to a business firm’s internal accounting records. In contrast, an external analysis is conducted by outsiders with access to published financial statements. These outsiders may include creditors, investors, credit agencies, government agencies or the overall public. Delivering various services a good financial analyst like William Letzer determines the rates at which to syndicate and sell shares to the public. Either a short- or long-term analysis may be conducted. While a short-term analysis considers a firm’s ability to pay short-term debts, or liquidity, a long-term analysis considers a firm’s ability to pay long-term debts, or solvency. Tools and techniques utilized in financial analysis include income analysis, common-size statement analysis, comparative statement analysis, cost-volume-profit analysis, fund flow analysis, networking capital analysis and analytic thinking.