Meaning & Significance of Financial Assessment Assignment

kernel & Significance of monetary Assessment - Assignment ExampleIt helps gain access to fast, independent and reliable fiscal assessment reports in order to take better decisions. It enables toachieve financial success. financial assessment is ground on past records and future projections. The company can gain much better control over their financial performance by looking at the past in order to help political program and predict the future. A sound financial plan contains a complete picture of the financial wellness of the business and the viability of strategic plans. It also helps to know whether the company is being run in a proper way during implementation, so that it can take preventive action before anything serious happens, for example, running bulge of cash. Successful financial analysis and planning require an understanding of a companys orthogonal and internal environments (Analysis of Financial lines Reviewing and Assessing Statements, 2006). Every enterpri se should prepare certain statements in order to ascertain the financial condition of the business, known as financial statements. A financial statement has an beta role in the decision making process. But the information in the financial statements is not effectively helpful in order to make a meaningful conclusion. Therefore, an effective and efficient analysis and interpretation of financial statements is necessary. Financial statement analysisis the process of identifying financial effectivitys andweaknessesof the firm by properly establishing kinship betweenthe items of the dimension sheet and theprofit and loss account (Financial Statement Analysis, 2012). Analysis means establishing a significant relationship between a number of items of two financial statements with each other, in order to draw a meaningful conclusion. By financial statements we mean three statements i. Balance Sheet or Position Statement ii. Profit and loss Account or Income Statement iii. Cash flow stat ement The term financial analysis is also known as analysis and interpretation of financial statements (Financial Statement Analysis- An Introduction n.d). Financial statement analysis is an evaluation to assess the efficiency and performance of the firm. Thus, it is very essential to measure the financial soundness, efficiency, profitability, and future prospects of business units. Financial analysis serves the following purposes Measuring profitability Indicating the trend of achievements Assessing the growth effectiveness of the business Comparative position in relation to other firms Assess overall financial strength Assess solvency of the firm. Elements of financial assessment Analysis of financial statement is an important part of the process of create a business plan, as it also helps to monitor the success of that plan. Elements of financial analysis include 1.Budgeting- Budgeting is an important element of financial analysis. Creating a budget means setting out planned ca sh inflows and safety valve of the business. It facilitates indentifying liquidity of the firm by