Financial statement analysis

 

Financial statement analysis is the process of reviewing and analyzing a company’s financial statements to make better economic decisions to earn income in future. Students are required to:

1. Explain the purpose of financial statement analysis for both external and internal users.

2. Identify and describe three common tools of financial statement analysis.

Sample Solution

Financial statement analysis

Financial statement analysis is the process of analyzing a company`s financial statements for decision-making purposes. Financial statement analysis is used to identify the trends and relationships between financial statement items. Both internal managements and external users (such as analysts, creditors, and investors) of the financial statements need to evaluate a company`s profitability, liquidity, and solvency. External stakeholders use it to understand the overall health of an organization as well as to evaluate financial performance and business value. The most common methods used for financial statement analysis are trend analysis, common-size statements, and ratio analysis. These methods include calculations and comparisons of the results to historical company data, competitors, or industry averages to determine the relative strength and performance of the company being analyzed.

As all nuclear powers do, the North Koreans have logically spread their nuclear arsenal amongst different delivery systems to keep the enemy guessing. The current shift in the focus toward the development of a submarine-based system is a paradigm shift in the thinking of the North Korean leadership who may have realised that it is the best alternative option considering that they are better to deploy tactically compared to land systems. North Korea is attempting to spread its arsenal between land-based intercontinental ballistic missiles and submarine-launched ballistic missiles.

While on the surface it may seem that the apparent obsolete technology of the conventional submarine arm, and limited reach or strike capability of the North Koreans could be contained by the South Korean, US and Japanese assets, it would be prudent to analyse the North Korean capabilities vis-à-vis the South Korean capabilities. Considering only the submarine arm of the NKPA, the large fleet could be easily used to divert attention or to make the enemy react in a particular manner, justifying an attack which is carried out using submarine /land based ballistic missiles. North Koreas history of armed provocations proves that it is quite capable of such tactics.

Under Kim Jong-Un, the Korean Peoples Navy (KPN) has initiated a number of modernisations of existing submarines since the early 2000. Key modernization have been of the Romeo class (about 22 in Numbers) and construction of the 34 m Sang-O class for special operation (to eventually replace the Romeo class). Around 1999-2000 an enlarged reconnaissance submarine called the Sang-O II class (K-300-class SSC) were constructed and by 2005 several were in service.

North Korea launched its first SSBA at the Sinpo South Shipyard in July 2014. The ‘Sinpo’ or ‘Gorae’ (“Whale”) class (displacing 1500 tonnes and 67 m length and 6.7 m width) Diesel Electric ballistic-missile submarine (SSB) program has blended the launch technology from Golf class ballistic missile submarines in the submarines sail area and can launch the Pukkusong-1 ballistic missiles. The next in class or the SINPO-C, a diesel electric s

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