analysis(2/0)
Financial analysis raises operational questions
Financial analysis has fantastic potential to raise questions about the operations of a business, but alone it can conclude little. A glance at assets may reveal an imbalance in current assets vs current liabilities, but it cannot tell the story of how this came to be or what decisions brought this about. Another step deeper into the individual transactions may supply more light, but even then educated guesses are all that’s possible; it takes questions posed to the actors before answers can be fully complete.…
Understand how financial accounts are related
Quality financial analysis depends on the analyst’s grasp of the interrelationship between accounts. A good financial analyst will look line by line through a business' balance sheet and find changes that prompt further inquiry. An example may be the amount of cash on hand. If cash on hand drops 80% this year, questions arise about where they cash went. Again, a marginal change in profit this year may warrant further investigation.…