University of Phoenix
January 11, 2014
Financial analysis is important for every organization. In the course of financial analysis, it is determines the areas which are to improved by it. Two organizations selected here are Bank of America and HSBC. Both organizations are in the banking sector and have operations in various parts of the world. The organizations work for the purpose of making sure they achieve their targets. The study is conducted for finding out whether these organizations are working appropriately.
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The problem regarding financial analysis will be solved with the assistance of certain methods. The methods include liquidity, capital, ratio, and common size analysis of the organizations.
Purpose of the Study
The purpose of the study is regarding two particular banking organizations, Bank of America and HSBC Holdings. The purpose of the study is to ensure that certain points about these organizations are taken into consideration. The purpose of the study is to determine the objective of each organization, the mission statement, and other details. Information regarding liquidity and capital of the organization will be considered. “The liquidity sources of the organizations are to be taken into consideration in the present case” (Bank of America, 2015). The assets of the organization along with its profitability, and another area of purpose of the study is to carry out ratio and common size analysis for the organization.
Significance of Study
The present study is significant in relation to leadership. The leaders of the organizations are in the position to make sure it is working for the purpose of ensuring the organization achieves desired results. Financial analysis helps an organization to ensure it is working for the purpose of ensuring better results. It is important to ensure the organization is working towards the achievement of its targets and development of positive results.
Study regarding financial analysis includes areas such as liquidity of organization, ratio analysis and common size analysis of the organization. Liquidity analysis of the organization will help to ensure the organization has sufficient liquid resources available. For a banking organization, it is important to have liquid funds available. There are instances in which the banks need to make payment of loans to various individuals. There are also cases in which banks need to make repayment of deposits made by the organization. If liquidity of the organization is not appropriate, it is likely the banking organizations will not be in the position to make sure the company is working for the purpose to achieve targets.
The role of financial analysis is important for organization. This point displays the study is significant. The organizations are banking institutions and there is a need for these organizations to ensure enhancement of profits. There is high level of competition in the market. Financial analysis helps the organization to determine whether it is in a positive position in the industry.
When the organization determines profits, they find out whether their profitability is higher in comparison to competition. Profitability is also compared by the organization based on past profitability targets. The trend of profits generated by the organization will determine whether the company has been moving in a positive direction regarding profits generated or whether the organization needs to locate methods for enhancing profits to a larger level in the...