Financial Analysis Essay

Submitted By rachel0531
Words: 473
Pages: 2

Guidelines for Preparation of a Financial Analysis

1. Gather information: a. Background information on the company i. Company website ii. 10-K and 10-Q reports iii. Stock price trends and analysts opinions (available on Yahoo Finance)) b. Background information on the industry i. Yahoo Finance ii. Internet search c. Background information on the general economy i. Data from Federal Reserve Bank of St. Louis (FRED) regarding economic and financial trends ii. Internet search

2. Follow your logical procedures: a. Think through and develop an understanding of the business model[1] (identify/observe/describe) i. Use the chart to diagram the industry and market dynamics ii. Use the list of six basic elements to outline the business strategy iii. Compare what you understand from the 10-K and 10-Q documents with what you see in the physical stores b. Visually review (eyeball) your financial information i. Vertical view of the balance sheet and income statement to understand structure and presentation of information (identify/observe/describe) ii. Horizontal view of the balance sheet and income statement to understand changes and trends (identify/observe/describe) iii. Make note of the story being told by what you see (explain) c. Focus on key paths (observe/describe/explain) i. Given what you know from steps a and b, conduct an analysis of the financial ratios ii. Focus on the ratios that are most important to the business model: these will be the ratios that are calculated using the key information you identified in the balance sheets and income statements. iii. Make connections between your understanding of the business model, the trends and events, the ratio outcomes, and the sustainability of the business model.

3. Prepare exhibit tables that summarize the key points of your analysis a. Minimize information included in the exhibits: stick to what is…