Creating Financial Statement and Analysis

Abstract

          In living routine lives, people engage in four economic activities i.e. production, consumption, distribution and exchange. In running a business, there are three relevant financial activities i.e. operation, investment, and finance. All these activities involve money which can be summarized as a Financial Statement in the accounting system. Creating a financial statement by oneself is the beginning of the financial health check up both personal and business parts.  The financial statement, however, cannot reflect a real situation and its operating direction. In preventing financial risks and sustainable management in both personal and business parts, ratio analysis is a financial instrument that can be applied to validate actual financial health such as liquidity, efficiency, debt management and profitability.