Minneapolis, MN, 28th June 2024, ZEX PR WIRE, Mike Pocrnich, a seasoned finance professional, leverages over 20 years of expertise in non-profit accounting, auditing, and financial analysis. With a Bachelor’s degree in Accounting from St. John’s University, he has built a career that blends technical prowess with strategic insight.
Residing in the Minneapolis metro area, Mike enjoys outdoor activities and spending time with his wife, daughters, and their family dog. His journey began at CliftonLarsonAllen as a Senior Auditor, where he managed non-profit audits, crafted internal controls, and mentored new auditors while also conveying complex financial data to organizational leaders.
As a Finance Manager at Element Financial Advisory, Mike excels in providing CFO and Controller services to a broad array of clients. He is adept at building financial forecasts, steering state and federal grant processes, and consulting on organizational financial strategies. His previous tenure as a Controller at Beltz, Kes, Darling & Associates required similar strategic oversight, with additional responsibilities like conducting annual audits and supporting client financing efforts.
With a comprehensive skill set in managing teams and nurturing client relationships, Mike’s leadership is underscored by his high emotional intelligence and communication skills. He manages financial operations, including accounts payable and payroll, with a keen eye for compliance and efficiency. Mike’s consistent application of accounting standards such as GAAP, FASB, and GASB over the past two decades cements his reputation as a detail-oriented and forward-thinking financial strategist. He is a dynamic asset for any entity aiming to refine their fiscal operations and pursue financial excellence.
What Is Financial Analysis?
Financial analysis is the process of evaluating businesses, projects, budgets, and other finance-related transactions to determine their performance and suitability. Typically, financial analysis is used to analyze whether an entity is stable, solvent, liquid, or profitable enough to warrant a monetary investment.
Key Takeaways:
- Internal Financial Analysis: Helps fund managers make future business decisions or review historical trends for past successes.
- External Financial Analysis: Assists investors in choosing the best possible investment opportunities.
- Types of Financial Analysis: Fundamental analysis uses ratios and financial statement data to determine the intrinsic value of a security. Technical analysis focuses on trends in value over time.
Understanding Financial Analysis: Financial analysis is used to evaluate economic trends, set financial policy, build long-term plans for business activity, and identify projects or companies for investment. This is done through the synthesis of financial numbers and data. A financial analyst will thoroughly examine a company’s financial statements—the income statement, balance sheet, and cash flow statement.
Corporate Financial Analysis: In corporate finance, the analysis is conducted internally by the accounting department and shared with management to improve business decision-making. This includes ratios such as net present value (NPV) and internal rate of return (IRR) to find projects worth executing. Tracking days sales outstanding (DSO) helps companies with large receivable balances identify the length of time it takes to turn a credit sale into cash.
Investment Financial Analysis: In investment finance, an external analyst conducts an analysis for investment purposes. Analysts can either conduct a top-down or bottom-up investment approach. A top-down approach looks for macroeconomic opportunities and then drills down to find the best companies within that sector. A bottom-up approach looks at a specific company’s financial health, analyzing financial statements, products, services, supply, and demand.
Financial analysis is only useful as a comparative tool. Calculating a single instance of data is usually worthless; comparing that data against prior periods, other general ledger accounts, or competitor financial information yields useful information.
Types of Financial Analysis
Financial analysis for equity investments can be categorized into two primary types: fundamental analysis and technical analysis.
Fundamental Analysis
Fundamental analysis involves evaluating financial statements to derive ratios, such as earnings per share (EPS), to assess a company’s value. By analyzing these ratios and considering the broader economic and financial context surrounding the company, analysts can determine the intrinsic value of a security. This intrinsic value is then compared with the security’s current market price to identify if it is undervalued or overvalued.
Technical Analysis
Technical analysis focuses on statistical trends derived from trading activities, like moving averages (MA). This method operates on the premise that a security’s price already reflects all publicly available information. Instead of examining a security’s fundamental attributes, technical analysis aims to predict market movements by identifying patterns and trends in stock prices and volumes.
Horizontal vs. Vertical Analysis
When analyzing a company’s financial statements, horizontal and vertical analysis are two prevalent methods. Both use the same dataset but approach it differently.
Horizontal Analysis
Horizontal analysis involves comparing financial data across several years. One year is designated as the baseline, usually the oldest, and subsequent years’ accounts are compared to this baseline. This method highlights which accounts are growing (e.g., revenue) and which are shrinking (e.g., expenses).
Vertical Analysis
Vertical analysis compares every line item on a financial statement to a specific benchmark, typically net sales. For instance, a company might compare the cost of goods sold, gross profit, operating profit, or net income as percentages of net sales. This analysis helps track how these percentages change over time.
Examples of Financial Analysis
In Q1 2024, Amazon.com reported a net income of $10.4 billion, a significant increase from $3.2 billion in Q1 2023. Analysts can use this data for corporate financial analysis. For example, Amazon’s operating profit margins can be calculated as follows:
- 2024: $15,307 million operating income / $143,313 million net sales = 10.7%
- 2023: $4,774 million operating income / $127,358 million net sales = 3.7%
From Q1 2023 to Q1 2024, Amazon’s operating margin increased, indicating the company earned more operating income per dollar of sales.
Why Is Financial Analysis Useful?
Financial analysis is crucial for determining whether an entity is stable, liquid, solvent, or profitable enough to justify investment. It helps evaluate economic trends, set financial policies, develop long-term business plans, and identify viable investment projects or companies.
How Is Financial Analysis Conducted?
Financial analysis is performed in both corporate and investment finance settings. Analysts meticulously review a company’s financial statements, including the income statement, balance sheet, and cash flow statement. A common method is calculating financial ratios to compare a company’s data with that of other companies or its historical performance. In corporate finance, this often involves projecting past performance metrics, like net earnings or profit margins, to estimate future performance.
About Mike Pocrnich: Mike Pocrnich is a finance professional with over 20 years of experience in non-profit accounting, auditing, and financial analysis. He holds a Bachelor’s degree in Accounting from St. John’s University and resides in the Minneapolis metro area.
For more information or to schedule an interview with Mike Pocrnich, please contact:
Mike Pocrnich
https://mikepocrnich.com/
http://www.elementfinancial.com
Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Economy Prime journalist was involved in the writing and production of this article.