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Asses and summarize your current financial situation. What measures are you using to describe where you...

Asses and summarize your current financial situation. What measures are you using to describe where you are? Your assessment should include an appreciation of your financial assets, debts, incomes, and expenses.

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Answer #1
We can analyse the current financial situation is by the following ways:
1)Horizontal Analysis : It is also known as trend analysis. It shows changes happen than previous period. It evaluate trends going on.
Changes are generally shown in amount and percentage. Amount change is computed by reducing amount of previous period
from amount of current period and percentage changes computed by deviding amount changed on amount of previous period.
Using the Horizontal analysis, we can know how appreciation in financial Assets, debts, incomes and expenses happened during  
current year compared to previous period.
2) Ratio Analysing : Using the ratio analysing, we can assess actual financial condition of a comapany. Using the Current Ratio, which
tell us how company able to pay it's current liability within short term period efficiently. Current Ratio should be not less than 2.
Using the Debt Equity Ratio, which tell us how is the company's capital structure means assets is financial by debt at what level. Leverage
analysing is done using debt equity ratio. Using the Profitability ratio as GP ratio and Net profit ratio, we can track current profitability
situation compared to Previous year and budgeted. A company can analyse it financial situation, where is exist by comparing these
ratio with privious period whether it is increased or not. Company can also compare the same with budgeted ratio and know the
appreciation . If more variance is exist in budgeted and actual ratio, we should deep analyse the reason for that.
3) Comparing with Budgeting : Budgeting is one f the technique by which a company can estimate the financial target as required as after
comparing that period, analysing whether we have reached to the budgeted target or not and if that is not achieved then how much variance
is there. By using budget variance analysing, a company can check it's appreciaion of the financial assets, debt, income and expenses.
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