Financial statement is a summary of accounting record was composed of balance sheet and income statement in a period that financial statement will be an information for users who making decision. Analysis financial statement is process for evaluating the financial position and operation company result with its purpose to determine condition of the company’s performance for the future. Technical development of analysis financial statement are ratio analysis and cash flow analysis. Financial Ratio analysis is analysis of comparison amounts in financial statement that useful for condition in financial company analysis. Types of financial ratio analysis:
1. Liquidity Ratio
This ratio is used for the ability of measure to fulfill short term liabilities. There are :
a. Current Ratio
b. Acid Test Ratio
c. Cash Position Ratio
2. Solvabilty Ratio
This ratio is used for the ability of measure to fulfill short term liabilities and long term liabilities. There are:
a. Total Debt To Equity Ratio
b. Total Debt To Total Assets Ratio
c. Long Term Debt To Equity
d. Long Term Debt To Total Assets
3. Profitability Ratio
This ratio is used for the ability to produce profit in a period. There are:
a. Return On Equity (ROE)
b. Return On Assets (ROA)
c. Net Profit Margin
d. Gross Profit Margin
Obstacles of financial ratio analysis: First, the differences in accounting principle from many countries. Second, the differences in culture, competition condition and local economy influence interpretation of accounting measurement and financial ratio, although accounting measurement from different countries presented that achievement of accounting comparability. Cash flow statement analysis is an analysis that financial statement shows how change in balance sheet accounts and income affect cash and cash equivalents, and also breaks analysis down to operating, investing and financing activities. If cash flow statement isn’t presented, often we find difficulty in counting cash flow from measure of another cash flow with adjust accrual basis profit.
Pelapu, Bernard and Healy make the basic structure that useful for analysis and business valuation with financial statement such as:
1. Analysis of International Business Strategy
This analysis the most important because it give qualitative comprehension of company and competitors associated with economy environment. This analysis involve audit annual report and publication other company, talk with staff company, analys and other financial professional. Additional information resources such as world wide web (WWW), group of trade, competitors, consumen, reporter, regulator, business company, and lobbyist.
2. Accounting Analysis
This analysis to analyze result of reported the company has or hasn’t reflect economy reality.
3. International Financial Analysis
This analysis to evaluate company performance for the past and now and also to appraise what its performance can retained. Information sources to analysis international financial statement :
a. Financial statement, support schedule, and note of financial statement.
b. Background of treasure company and disclosure.
Techinques that use in analysis of international financial are:
a. Analysis of Trend
This analysis to compare items periodically for 2 years or more than 2 years such as profit trend, geometric growth, etc.
b. Analysis of Ratio
This analysis to compare amounts of financial statement.
4. Analysis of International Prospective
This analysis consists of forecasting phase and valuation phase. Forecasting phase explicitly by business strategy, accounting record, and financial analysis. Valuation phase is an analys change quantitative forecasting become estimation of value company.
The difficulty and weakness in International Financial Analysis consists of:
1. Information Access
2. Timeliness of Information
3. Obstacle of Language and Terminology
4. Consideration of Foreign Currency
Choi, Frederick D.S., and Gary K. Meek.2010. Akuntansi Internasional.Buku 2, Edisi 5.Jakarta: Salemba Empat.