An Ultimate Guide On How To Write A Good Financial Statement Analysis In Several Steps

Start with checking the requirements provided by your instructor. Ensure that you understand all the guidelines. Set your goals and think of a business overview that will help you explain whether a company is worth investors’ attention. 

There are plenty of financial statement analysis paper examples available online. Read several samples to get acquainted with the structure of such reports. Write down the main points and create an outline of your future paper. 

There are various reasons for creating an outline:

it helps you come up with ideas
it organizes the ideas
it lets you present the material in a logical form

Generally speaking, a thorough plan will help you structure the report and properly organize your work.

Carefully check a company’s financial performance. Pay attention to financial statements, ratios, and competitiveness. Get acquainted with a company’s annual report with exchange commissions and securities.
Write a thorough description of a business explaining whether it is a good option for investment. 
Create a list of the advantages and disadvantages of a company and mention its core:

competencies
capabilities
tangible and intangible assets
competitive advantages

As soon as you’ve thoroughly checked a company’s financial performance, start working on your report. It should include such sections as:

business overview and investment thesis
executive summary
financial statement
industry analysis
financial ratios
valuation

Let’s have a closer look at each section and find out what should be mentioned there:

Business Overview And Investment Thesis
Start your report with an overview of a company, its financial health, and its performance. State if it is a good investment option and describe what advantages over its competitors it has.

Include the investment thesis at the top of the report and mention such things as:

the main investment negatives and positives
sales and profit growth trends
cash flow generation strength
company’s debt level
company’s liquidity and reliability

Executive Summary
This is an important section as the majority of end-users mainly pay attention only to an executive summary. It usually includes:

a company’s overview, history, and summary of its missions
current performance and expected outlook
a company’s competitiveness 
market conditions

This part of the report should be prepared in an easy-to-read format and contain all the relevant data presented throughout the paper. 

Financial Statement
Ensure that your report contains the collection of a company’s financial statements and includes:

balance sheet
equity statement
income statement
business cash flow statement



Industry Analysis

Obviously, it is vital to evaluate the industry a company is operating in. The main idea of this section is to present the comparison between the business and the competitors. Investors want to check a company’s market share and whether it is prominent in the industry of operation. It lets them realize if a business is competitive enough and could make a lucrative investment. 

Financial Ratios

This part of the report provides a company’s liquidity, debt, and efficiency. The ratio consists of:
current liquidity ratio that examines an ability of a company to pay obligations either short-term or within a year
debt ratio that examines the amount of a company’s leverage in terms of totals debts and assets
price to income ratio that shows a company’s stock price compared to its earnings per share. This ratio helps evaluate whether a business is a good option for investment

Valuation
It is one of the most significant parts of the report that suggests an independent value for the stock compared to the current market price. There are three main techniques that help get and provide relevant information:

discount cash flow analysis
relative value
book value

The first technique estimates investment value that is based on a company’s future cash flow. The second one helps determine an asset’s worth by comparing the value of similar assets. And book value lets estimate an approximate business worth in case of collapses and liquidates.

Leave some time for checking your paper as financial analysis reports require special attention:

Ensure that all the data is accurate and relevant
Pay attention to formatting and check that your report contains all the required sections
Verify that your paper doesn’t have any logical, grammar, or punctuation mistakes