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Business is always a popular course of study for students at the undergraduate and graduate levels. And why wouldn’t it be? Business is one of the most lucrative subjects a student can study, and the potential for high reward makes completing your business studies a high-stakes proposition. In the course of business degrees, you will likely be asked to write financial analysis papers, especially when you take courses in corporate finance or related subjects. However, many students find financial analysis papers to be particularly challenging to write. That’s why we’ve put together this ultimate guide to writing a financial analysis paper to help you through the process from beginning to end.
As you write your paper, you will likely write one of several types of financial analysis:
Horizontal analysis – compares a company’s performance over a period of time.
Vertical analysis – an analysis of expenses and income, typically for a balance sheet.
Short-term analysis – looks at turnover rate to determine deviations from long-term averages.
Multi-company comparison – compares the ratio component in different companies
Industry comparison – similar to the multi-company comparison, but examines the entire industry, not just select companies.
So where should you begin?
Start with the Assignment Question
It might seem obvious, but you need to be sure that you have begun by reading the assignment from beginning to end. It can often feel like you know where you need to go just by glancing at the question, but there is much more to it than simply scanning the question. You need to think about exactly what the assignment asks and make sure you understand each part of the assignment from beginning to end. If there are any parts of the assignment that you don’t understand, you should be sure to ask your instructor for clarification to make sure you are approaching the paper the right way from the get-go.
Review the Grading Rubric Carefully
Similarly, the grading rubric will tell you much of what you need to know about how to write your paper. The rubric explains what your instructor will be looking for as your instructor grades your paper. By carefully reviewing each section of the grading rubric, you can determine the right way to target your paper to maximize points by making sure you address the criteria necessary to earn full credit for each criterion.
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Double Check Your Data
When you begin writing your financial analysis essay, you will have a large amount of data to process, review, and write about. It can be easy to make a small mistake that can cause you to have very wrong conclusions. You’ll want to be sure to carefully go over all of your data and ensure that every calculation is correct before you start writing your paper. After all, a financial analysis is only as good as the data.
Some of the data you will need to analyze will include:
A cash flow statement, which explains where the company gets its money and the places where it spends it.
An income statement, which provides a summary of the company’s revenue, its spending, and profitability statistics.
A balance sheet, which provides information on the company’s asset allocations, liabilities, and shareholders.
An equity statement, which provides an overview of the dynamics of the equity each stakeholder has in the company.
Research Using Your College or University Library
When you develop your analysis, you will need to support it with academic resources. One of the best places to look for academic resources isn’t on Google or Bing but in your university library. Your library will have access to academic databases where the latest scholarly research can help you to analyze your paper topic and support your conclusions with the deep knowledge and academic conclusions.
Outline Your Paper
Before you begin the writing process, you should complete an outline of your paper. An outline will help you to develop your ideas and prepare for writing, saving you time and effort as you work through the writing process. As you work on your outline, you will be able to work through the challenges of writing the paper so you can smooth out the kinks, arrange topics logically, and fit together all of the pieces before you spend time writing text that might not otherwise end up in the final project. Putting in the effort at this stage of the writing process will help make everything easier later on and avoid costly tangents that could lead you astray or waste your time.
And finally—don’t forget to revise and proofread your paper once you do it. The last thing you want is to lose points because you made easily corrected grammar, syntax, or formatting mistakes.
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