he financial statement analysis framework provides steps that can be followed in any financial statement analysis project, including the following:
Articulate the purpose and context of the analysis.
What is the purpose of the analysis? Evaluating an equity or debt investment? Or issuing a credit rating?
The context needs to be defined clearly too: Who is the intended audience? What is the nature and content of the final report? What is the time frame? What is the budget?
Collect input data.
Gather a company's financial data from financial statements and other sources described in Subject c (other financial information sources). Also gather information on the economy and industry to understand the environment in which the company operates.
Compute ratios or growth rates, prepare common-size financial statements, create charts, perform statistical analyses, make adjustments to financial statements, etc.
Analyze / interpret the processed data.
Interpret the output to support a conclusion (e.g., a buy decision).
Develop and communicate conclusions and recommendations.
Communicate the conclusion or recommendation in an appropriate format.
Periodic review is required to determine if the original conclusions and recommendations are still valid.