Procurement Finance and Inventory Control

The financial analysis of a company is done in order to evaluate and interpret the financial data along with the other information in order to plan an assessment of the present and future financial condition of the company. The supplier with whom the organization is dealing has been experiencing cash flow problem. So, to deal with the problem, the income statement analysis and the balance sheet analysis has been done. The main objective of the income statement analysis is to make the adjustment to the income statement in order to arrive at sufficient cash flow. It focuses on the revenue growth, earnings and net income of the company. Balance sheet analysis is done in order to know the status of the company at a given point of time. It indicates the financial position of the company (Johnston and Johnston, 71-72). Both the income statement analysis and the balance sheet analysis are included in ratio analysis or financial analysis. This report will focus on the reasons to hold stock and will further focus on the factors which are to be considered in order to select a location for a new warehouse. Financial analysis includes the ratio analysis which is done to know the financial health of the company. It provides insight into the liquidity, profitability, efficiency, solvency and capital structure position of the company. It helps the management in planning future policies, evaluating the performance of organization, planning and forecasting the future, ensures efficient cost control and helps in investment decisions.

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