How to write a financial analysis paper

It takes a lot of time, studying, and calculation skills to know how to write a financial analysis paper perfectly. Finance is a narrow discipline that connects economics and mathematics, making applied business the discipline you need to master if you want to work in finance. However, you need to start somewhere, so learning about different types of financial papers and what to focus on in them is the first step on your way to graduate successfully.

Contents

How to write a financial statement analysis paper How to write an executive summary paper How to write an industry analysis paper How to write a paper on financial ratios

One of the most difficult stages is learning how to write a financial analysis research paper. If you master this skill, you will be able to complete any other type of assignment because this one includes all the different activities you need to do and present in a single work. Furthermore, we will give you some tips on what to focus on in every element of your finance homework to avoid major revisions and score high on grades.

How to write a financial statement analysis paper

Collecting numerical data and completing financial statements is a necessary part of the work on your paper in accounting. To analyze data and work with it, you need to gather it first, and this is when you need to make sure you have or can compose the financial statement of a company. A financial statement includes a cash flow statement, an income statement, a balance sheet, and an equity statement. Collecting them is only the beginning, as further on, you should take the information you need from them.

  • A cash flow statement demonstrates the sources the company obtains its money from and the ways it spends it.
  • An income statement is a summary of the company’s revenues, the money it spends, and profitability statistics.
  • A balance sheet is a document with information on the company’s asset allocations, shareholders, and liabilities.
  • An equity statement, in turn, is the current data on the dynamics in the equity each stakeholder has in the company.

Depending on your particular assignment, you may not need all of them in your financial statement, but it is important you know where to look for every aspect of it. Anyway, CopyCrafter can clarify it if it looks too difficult for you, and even help with finance homework if needed.

How to write an executive summary paper

An executive summary is something like an introduction to your financial analysis paper, in which you introduce the company, the problem you are working on, the methods you use to conduct the analysis, and the conclusion you eventually arrive at. Thus, it may serve as a substitution for reading the whole paper for people who do not want to check figures. For that reason, you need to work a lot on your executive summary, as it must reflect the quality of your work and it must represent your knowledge, understanding, and skills.

Make sure your executive summary is concise and easy to read yet contains only essential and relevant information. To create a comprehensive executive summary, you should include the company’s mission, history, performance, and profit. Then, finish it off with the conclusion your analysis arrives at, and invite the reader to read the whole thing.

How to write an industry analysis paper

Whether it is a small business or a huge corporation, the company you are writing about exists and functions in a certain ecology, which is its connection to the outside world—namely the market and the industry in this case. So, this part of the paper draws on the environment in which the company operates. The main aim of the industry analysis is to determine whether the company is a powerful competitor in this field and whether investing in this company will eventually bring any profit.

For that reason, you will need to include the information on the behavior of the company in its industry, which includes the report of the company’s financial health, the comparison of it with companies with the same specifications, its share of the target market, and the possible development or decay of the company. It is important to remember that industry analysis is not about promoting investment in the company but drawing a realistic picture of the pros and cons in digits. It must give the possible investor information to use while making a weighted decision.

How to write a paper on financial ratios

Another thing you should include in your financial analysis paper is the part in which you dwell on the different financial ratios of the company you have chosen. The ratios must provide information on the company’s debt load, liquidity, and efficiency. To measure these, you need to spend some time observing the last activity of the company in the market. Here is what you should pay attention to:

  1. To figure out the debt load ratio, you need to compare the total debt of the company to the total of its equity.
  2. To figure out the liquidity ratio, compare the company’s current ratio to its current liability.
  3. The return ratio is the relation between the profits that the company makes compared to the equity of its shareholders.
  4. To calculate the ratio of price to earnings, you need to divide the actual market price per share by the earnings after taxation per share.

Every ratio will give you an idea of the profitability of the company, its potential, and the shareholder opportunities, although it needs some calculations.

Types of financial analysis

There are several pathways you may choose in your financial analysis paper. Usually, the choice will depend on the peculiarities of your assignment. So, here are all of them for you to choose the optimal one. They differ in the initial point of the analysis and the direction you can take in it. Consequently, your conclusion will also depend on the analysis direction of your choice.

  • Horizontal analysis aims to compare consecutive activity reports of a company throughout a certain period of time. It is horizontal because the reports are supposed to be linear. So, if you want to study the dynamics of a company, choose this type.
  • Vertical analysis is used mostly for filling out a balance sheet. It is an analysis of expenses and income that is measured by percentage in the chain and stock sales.
  • In a short-term analysis, you need to review the working capital in detail, which includes the turnover rate calculation, inventory, and payable accounts of a company. This analysis helps to figure out whether there is any difference in the long-term average turnover rate, which may be alarming for business.
  • Multi-company comparison is focused on the ratio component of businesses. You need to calculate the ratios mentioned before in different companies and base your comparison on the digits you get.
  • To conduct an industry comparison, you need to work with ratios as well. However, the difference between it and multi-company comparison is that here you need to focus on the average results in the whole industry compared to the performance by these criteria of a certain company.

Evidently, all these tips may seem too abstract in theory. However, when you know what company you are going to analyze, everything will fall in place. Depending on the aim of your analysis, take the starting point based on the analysis type, and make sure to include all the components which should be there. Finally, present it in a brief, comprehensive, and intelligible executive summary.