-
Essay / Trend Analysis Essay - 528
Historical TrendsHistorical trend/time series analysis is used in the framework to compare the performance of an SME over time and to predict/forecast future trends. By gathering, calculating and analyzing historical trends, a pattern can be inferred. Therefore, hypotheses can be made using these trends for the future. The reliability of financial statements is essential when conducting trend analysis because inaccurate and inconsistent information can hinder the analysis or give an inaccurate assumption about the future. Likewise, changing accounting policies/reporting standards can hamper analysis. Careful and accurate analysis of trends is of utmost importance, while developing hypotheses for the future, such as sales growth, is an essential figure while valuing the SME. Budgets Budgets are a financial tool par excellence in any business, whatever its size. Budgets help determine how much cash will be needed for each unit, expected revenues and expenses, and most importantly, a budget helps identify discrepancies between budgeted and actual numbers. A face of an SME...