Analyzing and Interpreting Financial Statements

Table of Contents

Introduction3

Financial Data Interpretation4

Concepts4

Objectives4

Importance6

Methods of Interpretation of Financial Data6

Horizontal, Vertical and Historical Method6

Difference between Data Analysis and Interpretation of Financial Statements9

Importance of Generally Accepted Accounting Principles9

References11

Analyzing and Interpreting Financial Statements

Introduction

The interpretation of data is extremely important financial for each of the activities taking place within the company , through this worth executives to create different policies for financing external as well as they can focus on solving problems afflicting specific to the company as are the accounts receivable or accounts payable; moulded at the same time the policies of credit to the customer depending on your rotation, can also be a focal point when used as a tool for rotation of inventory obsolescence. Through the interpretation of the data presented in the financial statements of managers, customers, employees and providers of funding can account for the performance that the company shows in the market, is taken as one of the main tools of the company.

For this important financial data interpretation requires an investigation to present each of its components, in this report are detailed conceptualization retaking different authors as well as a conclusion about what collected, followed by detailing the objectives pursued by the interpretation , classifying them in order specifics general, presents itself the importance of interpretation of financial data interesting topic because in this part reveals the possible margins of occupation and use within a company , the methods of interpretation and difference are presented as part ending on topic. However, the example of a company and the application of financial ratios to their financial statements is detailed as the second part that comes to the issue of the Interpretation of Financial Data, the company resumed called Reno, SA de CV and have it applied different types of analysis of percentage and measurement .

Financial Data Interpretation

Concepts

For interpretation we must understand the "Findings Relating concepts and figures, based on the analysis and comparison." It consists of a series of personal judgments regarding the content of financial statements, based on analysis and comparison. Is the emission of a trial judgment or opinion of the information accounting of a company through technical or analytical methods that make it easier for your understanding and presentation.

Is a function and financial management is responsible for issuing sufficient evidence to support or reject different opinions have been formed regarding financial situation of one company. After the presentation and analysis of the above concepts to the end of the Interpretation of Financial Data, we can conclude that is the determination and issuance of a trial set of personal criteria on concepts, figures and other information presented in the financial statements of a specific company, such critters form are achieved by analyzing quantitative comparison of different parameters based on established methods or techniques (Nidhani, 2008).

Objectives

The primary objective of the proposed financial interpretation is to help executives of a company to determine whether financing decisions about determining whether it was the most appropriate, and thus determine the future of the investments of the organization ...