Financial analysis methods: advantages and disadvantages

Abstract

The article has defined the problem of enterprises in their operation efficiency improvement and providing. Their economic growth in an increasingly competitive environment on domestic and international markets has been considered. It has made a point on financial analysis importance in identifying financial results’ changes, financial ratio control, long-term planning and corresponding managerial decisions making, bankruptcy threat identification and investments risk. This article presents financial analysis technique as a subject of research, as well as a matter of right technique choice. It detects advantages and disadvantages of each technique and peculiarities of different techniques’ usage in certain analysis situations, which is the primary target of study. In spite of foreign and native scientists and practicians’ contribution in accuracy and trueness of financial analysis’s technique choice, systematization of fundamental issues’ information technique, providing that such issues occur during financial analysi. The article provides recommendations, which are a base for search of more substantial direction of comprehensive analysis of enterprises’ financial status. It underlines an applicability of foreign techniques, which are formed using certain types, procedures and methods of analysis in enterprises’ financial status study. Particularly, the stress is made on evaluation of most important indexes several times a year, development of new methods of financial status evaluation, bringing financial and tax legislation in line with international rules, unification of pro-forma financial statements techniques. This article is useful for such functional organizations as financial department, accounting department, marketing department, planning department and other economic departments.