Financial Analysis
What is Financial Analysis?
Financial analysis works with a company’s finances to determine its health, performance, and potential. This data, which comes from financial statements and other reports, is used by investors and companies to make strategic decisions.
For outsiders, that could be deciding whether to buy shares in the company. For management, it could mean establishing how best to run the business and setting goals.
Key Findings:
- Financial analysis involves examining a company’s financial data to understand its health, performance, and potential and to improve decision-making.
- Ratios are a key part of financial analysis, and past data is used to make projections.
- Financial analysis helps management better run companies and helps outside investors determine whether a company is a good investment.
- Common types of financial analysis include vertical and horizontal analysis, leverage analysis, liquidity analysis, and profitability analysis.