Financial Analysis
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Summary
1. Introduction ............................................................................................................................... 2
1.1. Contextualizationo .............................................................................................................. 2
1.2. Objectives 2
1.2.1. Objective Geral......................................................................................................... 2
1.2.2. Objective specific.................................................................................................. 2
1.3. Methodology ..................................................................................................................... 2
2. Analysis Financial
2.1. Objectives from Financial Analysis...................................................................................... 4
3. Importance of Financial Analysis ......................................................................................... 5
4. Conclusion 7
5. Bibliography ............................................................................................................................. 8
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Importance of Financial Analysis 2013
1. Introduction
1.1. Contextualization
Until the 1960s, there was never a need for effective management of the problems.
financial.
The role of the financial function gains greater prominence due to the scarcity of resources.
investment needs and increase in international competitiveness.
In the past, the financial function's main tasks were receivables and
payments, and maintenance of a balance that would allow normal operation (treasurer);
making investment and financing decisions (strategic decisions) with a view to
scope of acceptable levels of profitability and financial balance.
The financial function thus divides its tasks between economic and financial analysis and
by financial management.
Economic and Financial Analysis
Financial Function
Financial Management
1.2. Objectives
1.2.1. General Objective
General notion and differentiation of the Financial Function
1.2.2. Specific objective
Financial Analysis: objective and importance
1.3. Methodology
The method used for data collection for the work was a review.
bibliographic references to support manuals for the subject of Financial Analysis and electronic articles.
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2. Financial Analysis
Financial analysis is a set of techniques aimed at conducting a quantitative analysis and
qualitative assessment of the economic and financial situation of the company in order to provide information for
support decision-making.
Financial analysis arises from the financial function, which is one of the functions of the company, therefore,
Financial analysis is the study of the financial function.
The financial analyst prepares the financial information which is then delivered to the manager.
financial so that he can make decisions based on the information provided, as for him the
activities developed in an organization translate into a flow of inputs and outputs of
funds that need to be balanced.
Financial Analysis comprises a set of techniques aimed at studying the situation
economic and financial aspects of the company through the analysis of accounting documents (the balance sheet,
cash flow demonstration and the map of sources and uses of funds) with a view to equipping the
stakeholders1of appropriate economic and financial information for the decision-making process
decision.
The economic situation foresees the study of the following elements:
Structure of assets
Composition of profit and loss accounts
Economic efficiency analysis
Profitability
Economic risk
The financial situation provides for the study of the following elements:
Relation of own capital to third-party capital
Situation of the treasury and liquidity
1
Stakeholders in the company's situation
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Importance of Financial Analysis 2013
Financial Balance
Financial Risk
Financial Management is a set of techniques aimed at improving financial decisions.
achieving the objectives of the financial function efficiently, that is, the advantageous acquisition of
resources and application without jeopardizing the continuity of the company.
2.1. Objectives of Financial Analysis
The main objective (based on the produced documents) is to provide a
more effective and detailed understanding of the information and data collected or available, for
better understanding of all stakeholders.
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3. Importance of Financial Analysis
Both practice and literature have shown that financial analysis is one of the most tasks.
difficult and complex among the numerous ones that financial analysts have in their mission to
contribute to the development of companies.
Now, one might question: is analysis not merely a determination of indices?
what forms are already mounted or formalized? Where does the complexity reside, then, and the
difficulty?
The answer is extremely simple. Gathering or calculating indices is a rather simplistic task.
considering that the formulas are already standardized. What is needed is merely a
knowledge of basic or financial mathematics and knowing how to classify and extract the accounts from
demonstrations in order to apply them to the formulas, activities studied in any course
technical or higher education in Accounting. The great challenge of the issue at hand is precisely the
analysis or interpretation of these calculations or the extracted indices. Calculating is very simple, but
it is not an activity that closes in on itself. It is essential to reinforce the need to do well
interpret the data and information.
Starting from the hypothesis that part of the set of information that companies use to
making decisions is in the financial statements, especially in the analysis supplement
from these demonstrations, it must be stated that the importance of performing financial analysis is
of an extremely high level of relevance.
Therefore, still about the importance of analysis and perhaps with a desire to eliminate the
Ideas of difficulties and complexities previously discussed allow us to summarize a series
of reasons to highlight how important this analysis is for companies:
Well handled, it can constitute an excellent and powerful "control panel" of
administration
If it is not done from a 'manipulative' or 'creative' accounting, it can bring
quite accurate results;
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It is a powerful tool available to people who relate to or intend to.
to relate to the company, that is, the users of accounting information or
financial, whether they are internal or external;
It allows to diagnose the enterprise, revealing the critical points and enabling
present a draft of the priorities for solving the problems;
It allows a strategic view of the company's plans, as well as estimates its future,
its limitations and its potentials.
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4. Conclusion
For this reason, the importance of studying the financial function arises, which has as its main
objectives create value for shareholders2and evaluate investment decisions, this has as
It is of principal and fundamental importance to provide information to managers so that they can make decisions.
conclusions and decide without ambiguities or haste.
Therefore, financial analysis is a means by which the manager obtains reliable information.
for decision making.
2
Shareholders (also referred to as owners in some literature)
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5. Bibliography
Marketing and Design Professional[Link]
[Link]/2010/07/the-objectives-of-financial-analysis_04.html. Accessed on
October 5, 2013
Accounting Portal:
[Link] Accessed on
October 5, 2013
SENDI, António, Financial Analysis - Support Manual, Polytechnic University, Maputo
2012.
