financial analysis

(redirected from Financial Ratio Analysis)

Financial analysis

Analysis of a company' financial statements, often by financial analysts.

Financial Analysis

Research into data relating to the stability and profitability of businesses, especially to guide one's investing practices. At its most basic, financial analysis involves looking at financial statements to determine if a company is healthy. Balance sheets are important to financial analysis as they provide a ready-made means of investigating performance. However, it is important to note that quantitative financial analysis has limits: the accounting methods a particular business employs, for example, may make it look more or less healthy than it really is. See also: Fundamental analysis.

financial analysis

References in periodicals archive ?
While financial ratio analysis helps in assessing factors such as profitability, efficiency and risk, added factors such as macro-economic situation, management quality and industry outlook should also be studied in detail while investing in a stock.
Financial ratio analysis was used to test solvency, liquidity, profitability, turnover, efficiency and strength.
Exposure to Financial Ratio Analysis of Three Operating Firms in the Beer Industry in Nigeria.
The case works well as a single class session exercise following an introductory chapter or instructional session on financial ratio analysis.
Written in clear, concise language and intended for business owners or individual investors with little or no business training, the book contains 12 chapters on topics such as the four main financial statements (each receiving a separate section), financial ratio analysis, the SEC and independent audits, contemporary corporate scandals, and investment strategies.
Financial ratio analysis is an excellent method for determining the overall financial condition of a customer's business.
Combined with the improved financial ratio analysis created by replacing real estate with cash without adding an equal balance sheet liability, these considerations make the sale-leaseback transaction very attractive to any corporate treasury department.
However, various efficiency techniques are increasingly mentioned in academic studies as a complement to, or substitute for, financial ratio analysis which constitutes such a large portion of the CAMELS rating system utilized by financial institution regulatory agencies in their determination of a firm's safety and soundness.
The resulting percentage-change information transforms financial ratio analysis into a useful, forward-looking planning tool.
The use of financial ratio analysis in the business valuation process to evaluate past, current and future performance of a business is also addressed.
The DuPont financial ratio analysis method and the matrix approach method are mainly used for this comparison.

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