MAA103 Lecture Notes - Lecture 9: Jb Hi-Fi, Profit Margin, Income Statement
26 Jul 2018
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Topic 9 - analysis and interpretation of financial statements: profitability and asset. Managers who plan, organise and run the business. E. g. , marketing managers, production supervisors, chief financial officers, other employees. Investors to make decisions to buy, hold or sell shares. Creditors to evaluate risks of giving credit and lending money. e. g. , suppliers, bankers. Assessment of the profitability, liquidity and solvency of a business. Typically, we compare figures with: the equivalent figures from previous years (rather than in one year"s absolute terms) other figures in the financial statements. The process of comparison (analytical methods) can be categorised as horizontal, trend, vertical and ratio analysis. External and internal users make better business decisions. For example: continue or discontinue its main operation or part of its business. Compares the reported numbers in the current period with the equivalent numbers for a previous period, usually the immediate preceding period (e. g. sales, profit etc. ) Predicts the future direction of analysed items based on past information.
