Financial Analysis

Financial analysis is the process of evaluating a company’s financial performance and stability through the examination of its financial statements, ratios, and other financial metrics. This involves analyzing data from income statements, balance sheets, and cash flow statements to assess profitability, liquidity, solvency, and operational efficiency.

The objective of financial analysis is to provide insights that can inform investment decisions, risk assessments, and strategic planning. Analysts may use various techniques, such as ratio analysis, trend analysis, and comparative analysis, to interpret financial data and identify patterns or anomalies.

It is commonly used by investors, financial managers, analysts, and stakeholders to make informed decisions about resource allocation, investment opportunities, and business management. By understanding a company’s financial health, one can project future performance and make strategic recommendations.