An honest and accurate communication of a company’s financial strength and weakness through analysis helps the investors to entrust money on a particular business. Such a document helps the investors to get a detailed idea regarding the financial status of the company. The primary objective of such an analysis is to maximize the utilization of investor’s wealth and gaining overall profitability for the company as well. Therefore, formulating an effective financial analysis incorporating all the important points that would translate cost and benefits into monetary aspects would help to conduct an effective process of appraisement. Hence, the following factors must be taken into consideration while documenting a financial analysis.
- The document should specify about the organization conducting the analysis. This would help to establish the importance of the document to the intended investors.
- The financial analysis document should begin with a brief executive summary of the purpose of the financial findings. This should be followed by the tools used for carrying out the process of analysis.
- Define the financial terms used so that it helps the reader to understand the terminology of the document.
- Mentioning about the financial data or aspects that is being analyzed is necessary. This would help the shareholders or investors to determine the factors that have been taken into consideration for estimating the financial status of the company.
- Enunciate about the financial events that have taken place during the period which is being analyzed. This helps the investors to focus on the aspects on a broader scale.
- Finally, end the document with the observations, added with conclusions, regarding the financial status of the company.
Apart from the factors that are needed to be maintained for reciting the content of the financial analysis document effectively, it is also needed to structure them in a chronological format.