What is Financial Statement Analysis and why is it important?

[charlie]

Hi everyone,
I’ve been learning about Financial Statement Analysis and would like to understand it in more depth. How do professionals use it to evaluate a company’s performance and financial health? What are the key tools or ratios (like liquidity, profitability, and solvency) used in the process?

 

[riya]

Financial Statement Analysis is the process of examining a company’s financial reports—like the balance sheet, income statement, and cash flow statement—to assess its performance, profitability, and financial health. It’s important because it helps investors, lenders, and management make informed decisions, identify trends, and plan strategies for growth and risk management.

 

[Samuel]

The practice of evaluating a company's performance, profitability, and financial health by looking at its financial reports, such as the balance sheet, income statement, and cash flow statement, is known as financial statement analysis. It is crucial because it enables managers, lenders, and investors to make well-informed choices, spot trends, and develop growth and risk-reduction plans.

 

[jasminsain]

Financial statement analysis is the process of assessing a company's performance, profitability, and financial health by examining its financial reports, including the balance sheet, income statement, and cash flow statement. It is essential because it makes it possible for managers, lenders, and investors to see trends, make informed decisions, and create growth and risk-reduction strategies.