The main objective of this thesis is to evaluate the explanatory power of the balance sheet based on French accouting regulation. The first part deals with the general theory of accounting and financial reporting regulation, factors influencing national regulation, form and objectives of financial reporting, with focus on the balance sheet. The second part deals with the French legislative sources for accounting and financial reporting. The third part introduces the definition, structure and method of valuation of assets and liabilities based on French regulation. The fourth and fifth parts are devoted to the profit and loss account and the notes to the financial statements in accordance with French law. The last section contains an analysis of financial statements of a real company, and on this basis explanatory power of balance sheet is evaluated.

Financial analysis of selected company will be performed in my thesis. In the first part, theoretical bases will be introduced for practical use. Further, analysis of business environment – SLEPTE will be presented together with Porter's analysis and breakdown of internal business environment – 7S. Strenghts, weaknesses along with opportunities and threats for the company will be defined on the base of preceding analysis. In other words, SWOT analysis will be done. Financial analysis will be performed between years 2007 and 2011. Possible company's drawbacks will be solved in proposal part.

The aim of this diploma thesis is the financial analysis and evaluation of the financial situation in BUWOL METAL company, Ltd. The theoretical part deals with the theoretical knowledges of the financial analysis. In the practical part are these knowledges used for the analysis of the financial situation of company. The results of this thesis will be used as basis for the improvement of the current situation of company.