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AFA

Block 2.1 - main tools and techniques of analysis

QuestionAnswer
what is trend analysis? it is the comparison tool - horizontal percentages
state the 2 types of trend analysis? 1. year on year changes = interannual variations, applied at diff levels & groupings, for a few years 2. index numbers = specific year as a reference base, difficulty choosing base year (can distort trends if not chosen properly), used over many years
what is structural analysis? it is a proportional tool - vertical percentages - proportion represents each item in total group (diff mass levels) - *allows comparison between companies of different sizes* - *better perspective*
what are ratios? quotient between related magnitudes
give advantages of ratios - easy to calculate, difficult to interpret - detect areas to deepen analysis - interdependent
give limits of ratios - business concentration and multi-activity - absence of harmonisation in presentation of financial statements
what are differences in absolute values different items or equity groupings of the same accounting statement are compared - working capital - different levels of results - calculation of balance positions static measurements = reduces validity of conclusions
with regards to absolute values, what is balance position? compare correlative masses of BS and shows image of financial balances - group assets by homogeneous masses and compare difference of correlative masses (assets) of different signs
what are some other techniques and instruments - average maturation period - gross margin variation analysis - breakeven - financial leverage
how can you analyse inter-companies - differences in end of year date - differences in application of accounting principles and criteria
how can you analyse intra-companies - merger - abandonment of an activity - closing date changes - changes in criteria and accounting principles when the same company is analysed over time
Created by: patriciam03
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