Financial Statement Analysis of Potential Trading Partners

When formulating the choice to create a new partnership, we essential start make it a point to analyze all aspects of the one-third potential companies. In these trying economic times we must not make any hasty decisions when it comes to investing some(prenominal) our time and valuable financial assets in anything provided a guaranteed return. Every angle must be inspected for the best practicable outcome. In this circumstance, financial statement analysis has been used to notice possible venture and evaluate the financial strength of a potential partnership. Quantitative analysis such as ratio analysis enables the company to analyze the success, failure, and progress of potential partners. In addition, it also helps to spot trends in a business and to discriminate its performance and condition with the average performance of connatural businesses in the same industry. Evaluation of the three companies income statements reveals some interesting facts or so familiarity Cs operating expense versus its revenue. At firstly glance the revenue appears to be rather high but one look at the operating cost informs us that alliance B is not being run in an efficient manner. It is a wonder that Company B has not been forced to close its doors due to profit loss and junior-grade assets.

Now just relying on the facts on the table we rump come to the conclusion that Company C would have to be the last choice for a partnership. There susceptibility be some extenuating circumstances that are the reason for Company Cs poor financial statement such as the product they make is a luxury item that some consumers purchase any more, or the price of their product has not been adjusted to reflect the new economic trends. There might have been an inept CEO generating the wrong financial decisions. Until Company C starts making a profit; we need to bring to an end from investing. Companys B and A both have similar income statements, though A seems to run on a large scale. Company A appears to be bringing in a substantial profit and has a bigger... If you want to get a full essay, order it on our website: Ordercustompaper.com

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