Performing a Projected Financial Analysis, Essay Example

Projected Financial Analysis or Strategy Evaluation in an organization are tools of vital importance that facilitate determination of overall organizational performance. Important components of strategy evaluation include income statements, balance sheets and the cash flow statements that clearly show the financial performance of the company (Martin & Fernando, 2002).

The evaluation is undertaken by analysts who consider important points in as far the company is concerned. The operation activities of the company must be proved to be good. The analysts should also determine if the organization is properly equipped in terms of finance. The market condition is also determined by the analyst at the time of projected financial analysis. The organization status relative to other firms in similar industry is another issue to consider when conducting the analysis (Brealey, 2000).  The company management weaknesses and strengths are also considered, the type of service or product, economic cycle and any hazards that are encountered in the process of production. The analyst also considers the performance of the management and the rate of growth of the company. The past records of performance in the company are also scrutinized in addition to potential risks that the company faces in the course of its operations (Brealey, 2000).

Through a careful study of existing trends in the past performance of the organization, the analyst predicts the future performance of the company (Martin & Fernando, 2002).  Although there is a possibility of unforeseen events arising which may adversely impact the global economy, it is the duty of the analyst to allow a provision for such cases through a detailed preparation of contingency finances that are at the reach of the firm’s management in the event of the adverse events.

References
Brealey, R. A. (2000). Principles of Corporate Finance. NY: McGraw Hill.

Martin, S. F. & Fernando, A., (2002). Praise for Financial Statement Analysis A Practitioner’s Guide 3^rd Ed. John Wiley and Sons.