Object Finance Analysis Forex

The analysis and interpretation of financial statements is useful in achieving several objectives:
1) The evaluation of past performance
2) The assessment of current status
3) The prediction of future potential
4) Take the right decisions to maximize profits and resources

Being basically historical in nature, the financial statements are more convenient for the first two purposes. However, most readers of the financial statements are interested in the future, ie by the Company’s ability to grow and prosper and the availability of the company to adapt to varying conditions. Properly used, the analysis of financial statements can provide a basis for projecting future and clues about how the company will respond to these future situations.

From an internal perspective of the company, analysis of financial statements provides many advantages to the administration:

1) In planning the short and long term, when choosing between alternatives, objectives, policies, procedures and programs.

2) In an organization, to coordinate the actions of people who work in an organization with the goal of better preservation of the tangible assets, technical and human resources, allowing them to detect possible deficiencies in the operations of the different areas of a business.

3) In the integration, in seeking to articulate the elements and human elements and materials that show planning and organization as necessary for the proper functioning of the entity.

4) In the address, to ensure obtaining the results or objectives through the administrator’s authority exercised directly or by delegating to other factors, to organize, guide and supervise their subordinates, providing a firm basis for directing the efforts towards the aims of the entity.

5) In the control, to measure and compare the results with those expected, ie if there is a balance between planning and execution.

From an external perspective, allows presenting the situation and possible evolution of the entity to all external users: credit institutions, shareholders, suppliers, employees, customers, auditors, analysts, government agencies, competitors, investors, etc.

Through the analysis of financial statements, we can respond to key questions in the running of the institution:

What is the ability to pay short and long period for the entity?
Is it excessive inventory investment?
How Working Capital Account and how it is invested?
“Fixed assets are underutilized?
Does the performance you get is balanced with the investment?
Are you properly invested profits?
In what areas the company is demonstrating success or failure?

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