Financial Statement Analysis Essay

Financial statements are formal reports which show the current financial position of an entity. There are three main types of financial statements; the balance sheet, the income statement and the cash flow statement (Business Dictionary, 2016). Financial statement analysis refers to the analysis and interpretation of those three main financial statements. It can also be defined as understanding the risk and profitability of an entity (Ready Ratios, 2013). There are different techniques of financial statement analysis including ratio analysis, vertical or common size analysis and horizontal analysis or trend analysis. Another technique sometimes applied is trend analysis of the ratio analysis (Hancock, Robinson and Bazley, 2015).

The major objectives of financial statement analysis are reviewing the company’s performance over past periods, assessing the current financial position, forecasting profitability trends and forecasting financial failure (Fazal, 2011). These objectives in turn satisfy the ultimate objective of providing

The government may use the financial statements as a basis of assessing the tax payable along with assisting in analysis of the economy’s performance for legislation and policy related issues. Cardno is an infrastructure and environmental services company with involvement in transport, water cycles and defence therefore the government would have further interest and use of the financial statements in relation to the awarding of various government contracts. A piece of qualitative information contained within the 2014 annual report that would be of particular interest to the Government is Featured Projects (pg. 10-13) as is allows the different state governments to look at some of each other’s projects along with looking at what Cardno is doing internationally in relation to