How To Write A Financial Statement Analysis Research Paper Or Essay

How to Write a Financial Analysis Paper

Are you struggling to write a financial analysis paper? Well, look no further than here. 

So, what does such an essay entail?

A financial analysis paper examines the financial statements of a company to tell its general health and position in terms of liquidity. Unlike the stock performance that only summarises the various attributes of a company's financial performance, the analysis paper ventilates on all the areas, incorporating all the relevant information. 

A financial analysis paper helps the company’s stakeholders to determine the general health of the business.

Contents of Financial Analysis Paper

A financial analysis paper merges the contents of a firm's financial statements into one document. These statements include:

  1. Balance sheet;
  2. Equity statement;
  3. Income statement; and 
  4. Cash flow statement.

Each of these documents shows different fundamental data. For example, the balance sheet lists the assets against shareholder’ equity and liabilities. 

Since many factors influence the company’s operations, a financial analysis paper should capture the firm’s industry. An excellent way is to compare the firm to its competitors.

Additionally, when writing this paper, you highlight the company’s market share and its prominence in the industry. You intend to provide helpful information to the stakeholders in their respective decisions. For investors, the data helps in telling the competitiveness of the firm in the industry, which is a crucial factor when making a comparison between two investments.

Writing Financial Analysis Paper

There's no specific approach to writing such an essay. However, you need to include all the crucial components discussed above. It’s from these components that you draw your arguments and recommendations. In the end, you need to provide a position regarding the financial health of the business in question.

As usual, the financial analysis paper is not any different from other forms of essays. It needs an introduction that invites the reader, followed by a comprehensive body, and eventually, a conclusion. 

Your financial analysis paper should provide all the information investors needed when researching about the company. Here is an outline of such an article:

Executive Summary

An executive summary section highlights the most significant results of your financial analysis paper. However, even though it is the forward most part, you should write it last because it is a titbit of what’s in the rest of the report.

To get it right, write a brief of the firm, including its mission, history, and current performance. Don’t hesitate to speculate its outlook. Plus, include a summary of the firm’s industry, market situation and competition.

Company and industry overview

After the summary, introduce your company and the industry in which it operates. Let your readers have a brief description of the business to understand the company and its industry. Here, you want to include the company’s motivation and competitive advantage, if any. 

Uncover the incentive for a bullish or bearish stance on the firm. But remember, most of the things you highlight in this section will make your topic of discussion in the other parts. 

You can start this section by taking a dig into its annual report. If it's a publicly-traded firm, such information is available at its respective Stock and Securities and Exchange platform.

Body

The body of your financial analysis paper is where you now discuss the company in detail. Include the various significant aspects, such as the company’s debt load, liquidity, and efficiency. 

Financial ratios come in handy in your analysis. You can discuss each of them separately, from the liquidity and debt ratios to return and price to income ratios. 

You want to weigh on the company’s effectiveness to return income on the shareholder’s equity.

Other items to factor include the financial statements like;

  • Cash flow generation strength, 
  • Debt level and the company's liquidity
  • Sales and profit growth trends

You can go ahead and cover efficiency ratios such as the turnover ratios, and give a detailed breakdown of return on equity components.

Analyse the previous growth trends to come up with a forecast of the business’s performance. You want to help investors to accurately extrapolate the past trends into the future by deciding which aspects are more significant in defining success for a business.

Recommendations

Your last section of the paper consists of several sentences that summarise the findings and highlight the importance of the research. You will be targeting to create a lasting impression on the reader. 

You need to provide any information to support your essay and the reason why the reader should consider it.

In the recommendation section, you want to invite future researchers to explore further some areas of your paper. It should be short, made of up to about five points, and can either be a bull or bear story. 

Closing Word

While all the sections we have mentioned above prove sufficient, you can include other new subsections in the body. For example, you may need a small part in the political environment, corporate governance, or near-term news flow. These further make your copy comprehensive. The bottom line is you should include anything significant that can influence the future value of the company or business.

So, does this information prove useful? If you need help writing such a paper, don’t hesitate to reach out to us. Post your financial analysis paper order request on our platform.

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