Financial Analysis of ABC Corporation

2 Financial Statements Analysis The efficiency of its operations determines a company's value. Highly efficient operations result in high profits, which result in high earnings for investors. On the other hand, companies with low operational efficiency earn low profits, which results in low earnings for investors.

Financial statements are crucial in reflecting the efficiency of the operations of ABC Corporations. Crucial financial statements that reflect the efficiency of ABC Corporation include the balance sheet, the income statement, and the cash flow statement.

Balance Sheet A balance sheet shows the assets, liabilities, and equity of ABC Corporation for the current year and previous years. Assets are important because they show if the company has been investing its revenues in a manner that aids operations (Mashkour, 2020). In 2017, the company had assets amounting to $ 35.316 billion. In 2018, the value of assets increased to $ 37.670 billion; in 2019, the value of assets increased to $ 39.172 billion. The increase in the value of assets indicates that the company has increasingly added its assets to maximize productivity.

Also, the company's liabilities grew from 2017 to 2019. In 2019, the company's total liabilities were valued at $ 33.252 billion. In 2018, the value of ABC's liabilities increased to $ 34.620 billion, and in 2019, the value of the company’s liabilities increased to $ 36.179 billion (Macrotrends, 2023). The increase in liabilities resulted from the company's debt to finance its operations. Incidentally, the shareholder’s equity was $ 35.316 billion in 2017. The equity increased to 37.670 billion in 2018 and $ 39.172 billion in 2019 (Macrotrends , 2023). The increase in equity financing indicates an increase in the number of shareholders of the company, and a growing interest of the current shareholders in cases of purchases of rights issue.

Income Statement The income statement indicates the company’s revenues, cost of sales, and profits. In 2017, ABC Corporation generated revenues amounting to $ 153.144 billion. In 2018, the company’s revenue increased to $ 167.940 billion, and in 2019 ABC Corporation increased to $ 179.589 billion. The increase in revenues indicates that the company used its resources, including added assets to maximize shareholders’ value. The company’s net income also increased commensurately with the revenues, implying that the company managed its costs properly. In 2017, ABC had net profits amounting to $ 364 million. In 2018, the company’s net profits increased to $ 1.658 billion, and in 2019, the company’s net profits decreased to $855 million (Macrotrends , 2023).

Cash Flow Statement The cash received by ABC Corporation was generated from operating activities, investing activities, and financing activities. In 2017, the company generated $1.504 billion from operating activities. The revenue decreased in 2018 to $1.411 billion. In 2019, the revenue from