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Articles by Probir Banerjee
Page 9 of 45
Difference Between Cross-Sectional Analysis and Time Series Analysis
Although people consider cross-sectional and time-series analysis to be the same; however, they are totally different in many aspects.Based on Use and Nature of DataThe main difference between cross-sectional and time series analysis is in their use of data. Moreover, the data collected for time series and cross-sectional analysis are different in nature too.The difference between cross-sectional data and time-series data is that time-series data considers the same variables over a certain period of time, whereas cross-sectional data uses different data for a given point in time. It means that time-series data are stable, whereas the data used in the ...
Read MoreHow does Cross-Sectional Ratio Analysis Work?
What is Cross-Sectional Analysis?Cross-Sectional analysis is one of the handiest tools in comparing the performance of companies. Usually, companies within a given industry are tested with a chosen metric in cross-sectional analysis. It is not only correct, but it is also quite accurate in measuring the true financial potential of a company.Cross-sectional analysis is an analysis of specific data of a population or study of the pre-set subjects at a certain period of time. In finance, cross-sectional analysis is used to compare the performance of companies. The cross-sectional analysis offers insight into the performance of a company on a given ...
Read MoreTime Series Analysis: Definition and Components
What is Time Series Analysis?In order to evaluate the performance of a company, its past can be compared with the present data. When comparisons of past and present data are done, the process is known as Time Series Analysis. Time series are stretched over a period of time rather than being confined to a shorter time period. Time series analysis draws its important because it can help predict the future. Depending on the past and future trends, time series are able to predict the future.Time series analysis is helpful in financial planning as it offers insight into the future data ...
Read MoreIndustry Ratio Analysis: Definition and Types
What is Industry Ratio Analysis?In order to check the financial condition of a firm, the financial health of the firm may be compared with the other players in the industry. It gives an insight into the company’s performance vis-a-vis its competitors. The performance of a company may look very impressive when checked alone, but the overall quality of performance may be weak when its peers are considered. Therefore, financial ratios can be used to compare the overall performance in order to rank the company’s growth, profitability, and progress.Types of Industry Ratio AnalysisHere are the most commonly used financial ratios types ...
Read MoreWhat are the Ratios Used in Financial Analysis?
A number of ratios are used in financial analysis to measure the profitability and the overall financial health of the company in the short as well as in the long terms. These ratios are mainly used by the investors, owners of the company, and management. The short-term creditors are interested in the short-term liquidity of the firm whereas the long-term debtors seek long-term sustainability and profitability.The owners of a firm are more concerned mainly in the profitability and growth of the firm. The management, on the other hand, is interested in all other financial aspects of the company. So, depending ...
Read MoreWhat is a Financial Ratio?
What is a Ratio?A ratio, in simple terms, expresses a relationship between two or more things. Ratio is an indicated quotient of two mathematical terms that shows a relationship and expresses a fact.In the case of financial analysis, a ratio is used as a benchmark to estimate the financial position or to look at the financial position of the firm. It is to be noted that to form a ratio, at least two mathematical expressions are required. A single value, by its nature of individuality, cannot express a ration on its own.What is a Financial Ratio?The absolute accounting figures mentioned ...
Read MoreWho Uses Financial Analysis and for What Purpose?
What is Meant by Financial Analysis?Financial analysis is a method of finding the strengths and competencies of a firm by establishing relationships between the items on the balance sheet and the profit and loss account. It is very essential for firms to succeed by focusing on needful financial points and revitalizing their financial strength. Financial analysis can be done by any stakeholder of the company and they differ in terms of content which is used by the stakeholder according to his/her own needs.Who Uses Financial Analysis?Financial analysis can be used by different groups of people for a variety of reasons. ...
Read MoreBenefits of Statement of Changes in the Financial Position of a Company
Apart from having excellent analytical value, the statement of changes in the financial position helps stakeholders understand numerous other aspects of a business. It offers insights into the working capital and cash inflow position of a company. As the statement includes funding details of the past, it helps analysts in understand the financial and investment policies followed by the company in the past. It also shows the non-current assets that have been acquired by the firm and the resources that have been used for doing so.Furthermore, it also helps a company in realizing the basics in the following areas −LiquidityThe ...
Read MoreWhat are the Sources and Uses of Cash Flow?
In broader terms, the sources of cash flow include the following −Profitable operations of a firmDecrease in assets except cashProceeds from sale of ordinary shares or preference share issueIncrease in liabilities (including bonds and debentures)Uses of Cash FlowFollowing are some of the uses of Cash Flow −Loss arising from operationsIncrease in assets except cashDecrease in liabilities including the redemption of bonds and debenturesCash dividendsRedemptions of redeemable preference sharesThe statement of changes in cash position is found easily by recording inflows and outflows of cash. The net cash increase is the cash position at the end of a period minus the ...
Read MoreDifference Between Cash Flow Statement and Funds Flow Statement
Although a lot of people consider cash flow statement and funds flow statement to be the same; however, they are different in many aspects. Right from their popularity to their use, they have differences in many forms.Following are the major differences that separate cash flow and funds flow statements −Reporting Financial HealthThe cash flow statements and the funds flow statements report different aspects of the financial health of a company. The cash flow statement is more into cash. It shows the inflow and outflows of cash within a certain time period. This is mainly to show the cash or cash equivalents ...
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