Name : Iza Navira

Nim : 2101103010143
Subject : Financial Statement Analysis

Financial analysis entails examining a company's financial statements, such as the

balance sheet, income statement, cash flow statement, statement of changes in
equity, and notes to the financial statements. Its purpose is to evaluate the company's
current financial condition, analyze financial results, and identify potential
improvements. The analysis involves collecting and utilizing financial information
to predict future financial conditions, identify funding sources, and forecast the
company's position in the capital market. This process is part of broader concepts,
including the analysis of financial and economic activities.

Types of financial analysis encompass the examination of funds and sources of

funds, liquidity, expenditures and revenues, and business performance. It may extend
to other segments of the annual report critical for informed business and investment
decisions. The focus includes assessing assets and liabilities, solvency, liquidity,
financial stability, and asset turnover.

Crucial for decision-making, financial analysis considers general principles like

productivity, economy, and profitability, along with special principles such as
liquidity, stability, and security. It takes into account internal and external factors,
financing decisions, and more. The analysis occurs in two phases: preparation,
involving familiarization with the audit conclusion, and execution, which assesses
financial stability, liquidity, solvency, capital adequacy, financial situation,
profitability, risk of financial results, and organization.

The concept of financial analysis involves breaking down the whole into parts to
understand and evaluate a company's financial condition. It distinguishes between
economic effect as an absolute indicator and economic efficiency as a relevant
indicator comparing the effect with costs or resources. Analyzing assets and sources
of funds involves examining the balance sheet through static and dynamic analysis.
Descriptive analysis presents quantitative and qualitative characteristics, while
research analysis explores relationships, correlations, causal relationships, laws, and
tendencies among research objects.

Financial analysis techniques, in use since the 1930s, convert financial statement
data into usable information for management purposes. Auditors, appraisers, and
experts use these techniques to assess a company's creditworthiness, especially for
lending decisions by banks. Financial information, including bookkeeping and
reports from financial authorities, is crucial for conducting such analysis, providing
insights into a company's business, including the likelihood of bankruptcy. Overall,
financial analysis is vital for evaluating a company's financial health and making
informed decisions.