Financial Statement Analysis Procedure
The Financial Statement Analysis Procedure makes information on financial statements more understandable and meaningful. The procedure rearranges and reorders statements for consistency and ease of use, presents financial objectives, forecasts, and historical performance, and performs useful relationship calculations such as total relative increases/decreases, financial ratios, and percentages. This procedure applies to the Finance and Accounting Department. (10 pages, 1561 words)
Financial Statement Analysis Responsibilities:
The CFO (Chief Financial Officer) is responsible for analyzing financial statements, and for preparing reports and recommendations to Top Management and the Board of Directors concerning financial performance.
Top Management and the Board of Directors are responsible for reviewing financial analysis and approving corrections or improvements to financial policies, objectives, or activities.
The Controller is responsible for providing the CFO with financial accounting statements at the end of each financial period.
Financial Statement Analysis Definitions:
Financial Statements – Statements, typically created monthly, that give an overall picture of business operations and of financial condition.
Financial Analysis – To perform appropriate calculations and evaluations of information contained in financial statements in the form of historical trends, relationship ratios.
Financial or Accounting Period – The length of time businesses use for preparing and reviewing internal accounts to monitor business performance (e.g., weekly, monthly). The period used depends on the industry, business model, and business dynamics.
Financial Statement Analysis Procedure Activities
- Financial Statement Analysis Plan
- Collect and Calculate Financial Data
- Financial Statement Analysis and Reporting
- Improving the Financial Statement Analysis Process
Financial Statement Analysis Procedure Forms