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Financial Statement Analysis Report - Assignment Example
Finance & Accounting
Pages 4 (1004 words)
According to the reading of Pamela Peterson Drake financial analysis is the name given to the progression of selecting, evaluating and explaining to assist in investment and financial management. It is the process of assessing business in an attempt to plan and improve all financial details…
The preparation of financial statement analysis requires financial ratios, accounting data from financial statements. The ratio assists in measuring strengths and weaknesses of the firm and allows trends and comparisons with other firms within the industry to be identified. It also covers the areas of liquidity, operating profits, financing and stockholders' return on investments (Collier, Grai, Haslitt, McGowan, 2004). In the condition given, Track Events Ltd. is owned by a local independent ticket agent who sells tickets for sporting events, and that is why he needs to analyse his financial accounts in order to determine boost in sales and to make sure that his business is not suffering from insolvency. Total revenue from commissions and profitability has varied widely over the last year. Revenue from commissions peaked over ?1,073,000 in 2010 and dropped to ?1,053,000 in 2011. This may be due to decrease in the demand for the tickets being sold. Assessing the profitability of Track Events Ltd. is very significant in order to determine future business plans. These profitability ratios indicate the increase in the profitability of current operations of the business. Operating profit margin helps to provide useful information for investors when examining the trend for determination of the company’s quality. It has risen from 9% in 2010 to 28% in 2011. ...
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