Financial Statements: Industry Comparison
Financial Statements: Industry Comparison University of Phoenix
BSA 500: Business Systems I
Instructor: May 28, 2007
Financial Statements: Industry Comparison
More often managers are exposed to financial data and the need exists to develop knowledge and understanding of financial accounting concepts and principals. Nearly all companies prepare financial statements of some type and the complexity of those statements will vary. The analysis and interpretations of financial statements is made easier by the preparation of financial reports that can be produced daily, monthly, quarterly, and yearly. The following paper is intended to be a comparative financial analysis of four publicly traded companies within the same industry as Riordan Manufacturing, Huffman Trucking, Kudler Fine Foods, and McBride Financial Services. For the purpose of this research paper an analysis of financial statements will include the balance sheet and income statements for each company. An analysis of financial statements must serve as gauge of overall health of a company.
Financial statement analysis focuses on one or more elements of a company 's financial condition or performance with emphasis on four areas of inquiry with varying degrees of importance: liquidity and efficiency, solvency, profitability, and market prospects (Chiappetta, Larson, & Wild, 2002, p. 742). Before analytical comparisons or measurements take place understanding the building blocks of what financial statements represent is imperative.
Table 1 Building Blocks of Financial Statements
Liquidity and Efficiency Ability to meet short-term obligations and to efficiently generate revenue. Solvency Ability to generate future revenues and meet long-term obligations.
Profitability Ability to provide financial rewards to attract and retain financing.
Market Prospects Ability to generate positive market expectations.
Note. From "Fundamental Accounting Principles," by Chiappetta, B., Larson, K., &
BSA 500: Business Systems I
Instructor: May 28, 2007
Financial Statements: Industry Comparison
More often managers are exposed to financial data and the need exists to develop knowledge and understanding of financial accounting concepts and principals. Nearly all companies prepare financial statements of some type and the complexity of those statements will vary. The analysis and interpretations of financial statements is made easier by the preparation of financial reports that can be produced daily, monthly, quarterly, and yearly. The following paper is intended to be a comparative financial analysis of four publicly traded companies within the same industry as Riordan Manufacturing, Huffman Trucking, Kudler Fine Foods, and McBride Financial Services. For the purpose of this research paper an analysis of financial statements will include the balance sheet and income statements for each company. An analysis of financial statements must serve as gauge of overall health of a company.
Financial statement analysis focuses on one or more elements of a company 's financial condition or performance with emphasis on four areas of inquiry with varying degrees of importance: liquidity and efficiency, solvency, profitability, and market prospects (Chiappetta, Larson, & Wild, 2002, p. 742). Before analytical comparisons or measurements take place understanding the building blocks of what financial statements represent is imperative.
Table 1 Building Blocks of Financial Statements
Liquidity and Efficiency Ability to meet short-term obligations and to efficiently generate revenue. Solvency Ability to generate future revenues and meet long-term obligations.
Profitability Ability to provide financial rewards to attract and retain financing.
Market Prospects Ability to generate positive market expectations.
Note. From "Fundamental Accounting Principles," by Chiappetta, B., Larson, K., &
References: Chiappetta, B., Larson, K., & Wild, J. (2002). Fundamental Accounting Principles. New York: McGraw-Hill. Balance sheet analysis. (1999). Retrieved May 9, 2007, from http://www.ameritradefinancial.com