Financial Analysis
The examination of financial statements like income statements, balance sheets, and cash flow statements to inform strategic decisions.
Implications
The process of evaluating a company's financial statements and performance to understand its financial health, profitability, risk, and growth potential, often used by investors, managers, and analysts to make informed decisions.
Example
Example: An investor conducts a financial analysis of a potential investment by examining the company's income statement, balance sheet, and cash flow statement, assessing its profitability, liquidity, and solvency.
Related Terms
Different from financial forecasting, which predicts future financial performance, financial analysis focuses on evaluating current and past financial data to assess a company's condition.
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