Several types of stakeholders and investors attempt to arrive at an estimation of a companys financial performance and its future outlook for investment purposes, conducting business, self-evaluation of strengths and weaknesses, and extension of credit. They pose such questions as follows:

What is the companys performance record and what are the future expectations?

How much risk is inherent in the firms existing capital structure?

How successfully does the firm compete in its industry?

What will be the source of debt repayments?

How well does the company manage working capital?

How well has the firm performed and why?

What are the strengths and weaknesses of the companys financial position?

If you were performing this analysis, how would you go about doing it?

Consider the following ideas in your answer:

1. What type of financial data would you use and where would you get it?

2. What ratio analysis would you do?

3. How would you determine the leaderships performance in the company?

4. What would you consider as an indication of a successful company versus a poor performing company?