Sunday, 2 May 2021

Guidelines to Make A Good Financial Analysis for Dissertation

Financial Analysis
The use of financial data for calculating and reviewing the performance of a business is called financial analysis. Based on this analysis results, strategies, investment decisions, and suggestions for improvement are made. Mostly, the analyst uses MS Excel for making analysis.

Purpose of Financial Analysis:

According to a dissertation writing service, there can be multiple purposes for conducting the financial analysis
  • Checking stability of business and assets
  • Reviewing the performance
  • Reviewing the liability of business
  • Analyzing the liquidity and profitability of the business

Financial Analysis Dissertation:

Writing a financial analysis dissertation is a very daunting task. It needs the writer to present a true, comprehensive, and useful analysis that can help the stakeholders in decision-making. For writing a perfect financial analysis dissertation, the researcher needs to include all financial analysis elements and factors in the dissertation. For any kind of analysis, the students need to collect data. The kind of data which is required for financial analysis is balance sheet, income statement, equity statement, and cash flow statement.

An income statement tells about the profit, revenue, and spending. A balance sheet gives the summarized picture of the assets, liabilities, and shareholders’ equity. The cash flow statement tells about the cash in and cashes out. The equity statement tells about each stakeholder’s equity.

Executive Summary:

An executive summary is necessary for presenting the overview of your dissertation. It tells what your dissertation contains. It tells what type of financial analysis you are conducting, whose financial analysis you are conducting, how you have conducted the analysis, and what the result of your analysis is. The executive summary is like a mini version of your dissertation that summarizes the whole dissertation into one or two paragraphs. An executive summary must be succinct, simple, understandable, and must contain all the necessary relevant information.

Making Comparisons:

For conducting reviews, you need to make comparisons between different values from the financial statements. This comparison helps to calculate the value of different financial ratios that tells about the position and performance of the business. It includes the comparison between
  • Total debt and total equity
  • Current assets and current liabilities
  • Profit and shareholder’s equity
  • Actual market price per share and earnings after taxation per share.

Types of Financial Analysis:

There are different ways of conducting a financial analysis. It includes
  • Horizontal analysis
  • Vertical analysis
  • Short-term analysis
  • Industrial comparison
  • Multi-companies analysis

The type of financial analysis you choose depends on the topic of your dissertation. If you are researching one company only you will be using vertical analysis, horizontal analysis. If you are making a comparison you can choose industrial comparison or multi-companies analysis. If you are studying the dynamics of a company, then horizontal analysis is the right choice. If the purpose of the study is an examination of balance sheets, then the vertical analysis is the right choice. For studying working capitals, short-term analyses are conducted. When the industrial trends are under study, then the industrial comparison is made.

After the selection of financial analysis type based on your dissertation and the purpose of the study, you need to review the elements of financial statements one by one. These statements are used for calculating different financial ratios, which will help in making analysis. The profit margin ratios are calculated through income statement. It includes
  • Operating profit,
  • Gross profit
  • Net Profit
  • Revenue Growth

For calculating gross profit margin the gross profit from revenues is divided by sales. It tells about the percentage of revenue. The operating profit margin is determined by dividing earnings by revenue. It tells about remaining revenue after operating costs. Revenue concentration is determined by dividing the single revenue by total revenue. It tells about the most revenue-generating customer.
  • A balance sheet assists in calculating liquidity ratios (current ratios, net-working capital, quick ratios, and interest coverage); leverage ratios, and efficiency ratios.
  • Cash flow statements are necessary for reviewing the liquidity of a business.

The Bottom Line:

A professional financial analysis dissertation must be written in such a way that it must provide all the necessary information that is required by an investor for making decisions. Through financial analysis a uniform methodology is used that helps in determining the improvement in the performance of the organization with the passage of time. A financial analysis done in the right way helps to understand the organizational and industrial trends that can be helpful for students in future.