Theories on Financial Analysis
Theories on Financial Analysis
The landmark study of financial analysis is “Security Analysis” by Benjamin Graham (an investment manager) and David Dodd (professor of finance at Columbia). The first edition was 1934, about the worst period in the financial history of America. Despite being in the middle of the Great Depression, their analysis and recommendations were professional and hard boiled. They distinguished investment from speculation, but considered most investments in common stock as speculative. The focus of financial analysis has changed substantially since then, but a historical foundation in financial analysis requires quite a bit of time with Graham and Dodd.
This research thesis is about the financial statement analysis of Pakistan Petroleum Limited one of the largest exploration and production company in Pakistan. Ratios are very helpful in this regard different ratio can be used for different industries to predict their performance. There have been many academic studies on the use of financial ratios to forecast financial failure and to forecast the financial position of the company in the future. Basically, these studies try to isolate individual ratios or combination of ratios that can be observed as trends that may forecast failure.
A reliable model that can be used to forecast financial failure can also be use by management to take preventive measure. Such a model can aid investors in selecting and disposing of stocks. Banks can use it to aid in lending decisions and in monitoring accounts receivable. In general, many sources can use such a model to improve the allocation and control of resources. A model that forecasts financial failure can also be valuable to an auditor. It can aid in determination of audit procedures and in making a decision as to whether the company will remain as a going concern.
Financial failure can be described in many ways. It can mean liquidation, deferment of payments to short-term creditors, deferment of payments,
The landmark study of financial analysis is “Security Analysis” by Benjamin Graham (an investment manager) and David Dodd (professor of finance at Columbia). The first edition was 1934, about the worst period in the financial history of America. Despite being in the middle of the Great Depression, their analysis and recommendations were professional and hard boiled. They distinguished investment from speculation, but considered most investments in common stock as speculative. The focus of financial analysis has changed substantially since then, but a historical foundation in financial analysis requires quite a bit of time with Graham and Dodd.
This research thesis is about the financial statement analysis of Pakistan Petroleum Limited one of the largest exploration and production company in Pakistan. Ratios are very helpful in this regard different ratio can be used for different industries to predict their performance. There have been many academic studies on the use of financial ratios to forecast financial failure and to forecast the financial position of the company in the future. Basically, these studies try to isolate individual ratios or combination of ratios that can be observed as trends that may forecast failure.
A reliable model that can be used to forecast financial failure can also be use by management to take preventive measure. Such a model can aid investors in selecting and disposing of stocks. Banks can use it to aid in lending decisions and in monitoring accounts receivable. In general, many sources can use such a model to improve the allocation and control of resources. A model that forecasts financial failure can also be valuable to an auditor. It can aid in determination of audit procedures and in making a decision as to whether the company will remain as a going concern.
Financial failure can be described in many ways. It can mean liquidation, deferment of payments to short-term creditors, deferment of payments,