Download Concepts and objectives of financial economic analysis of foreign

Theme: Introduction into course «Financial economic
analysis of foreign economic activities of enterprise»
Plan:
• Concepts and objectives of financial economic analysis of foreign
economic activities of enterprise.
Financial analysis (also referred to as financial statement
analysis or accounting analysis ) refers to an assessment of the
viability, stability and profitability of a business, sub-business
or project.
• financial analysis can be an important tool for small
business owners and managers to measure their
progress toward reaching company goals, as well as
toward competing with larger companies within an
industry.
• It is also important for small business owners to
understand and use financial analysis because it
provides one of the main measures of a company's
success from the perspective of bankers, investors,
and outside analysts.
The process of evaluating businesses, projects, budgets and other
finance-related entities to determine their suitability for investment.
Typically, financial analysis is used to analyze whether an entity is
stable, solvent, liquid, or profitable enough to be invested in.
One of the most common ways of analyzing financial
data is to calculate ratios from the data to compare
against those of other companies or against the
company's own historical performance. For
example, return on assets is a common ratio used
to determine how efficient a company is at using its
assets and as a measure of profitability. This ratio
could be calculated for several similar companies
and compared as part of a larger analysis.
Goals
• Financial analysts often assess the following elements
of a firm:
• 1. Profitability - its ability to earn income and sustain
growth in both the short- and long-term. A company's
degree of profitability is usually based on the income
statement, which reports on the company's results of
operations;
• 2. Solvency - its ability to pay its obligation to
creditors and other third parties in the long-term;
• 3. Liquidity - its ability to maintain positive cash flow, while satisfying
immediate obligations;
• 4. Stability - the firm's ability to remain in business in the long run,
without having to sustain significant losses in the conduct of its
business.
• Assessing a company's stability requires the use of both the income
statement and the balance sheet, as well as other financial and nonfinancial indicators. etc.
Financial ratios face several theoretical
challenges:
• They say little about the firm's prospects in an absolute sense. Their
insights about relative performance require a reference point from
other time periods or similar firms.
• One ratio holds little meaning.
• Seasonal factors may prevent year-end values from
being representative. A ratio's values may be
distorted as account balances change from the
beginning to the end of an accounting period.
• Financial ratios are no more objective than the
accounting methods employed. Changes in
accounting policies or choices can yield drastically
different ratio values.
Types of investment
analysis
Technical
Fundamental
Industry
Economic
Company
• Fundamental analysis of a business involves analyzing its financial
statements and health, its management and competitive advantages,
and its competitors and markets.
Fundamental analysis lets investors find 'good' companies, so they
lower their risk and probability of wipe-out.(вероятность полного
банкротства (уничтожения).
There are several possible objectives:
• to conduct a company stock valuation and predict(предсказать ) its
probable price evolution,
• to make a projection on its business performance,
• to make internal business decisions,
• to calculate its risks.
•
Technical analysis maintains that all information is reflected
already in the stock price. Technical analysis does not care what
the 'value' of a stock is.
• Investor starts his or her analysis with global
economics, including both international and
national economic indicators, such as GDP growth
rates, inflation, exchange rates, productivity, and
energy prices. He or she narrows his or her search
down to regional/industry analysis of total sales,
price levels, the effects of competing products,
foreign competition, and entry or exit from the
industry. Only then does he or she narrow his or her
search to the best business in that area.