Financial analysis (also referred to as financial statement analysis or accounting analysis or Analysis of finance) refers to an assessment of the viability, stability and profitability of a business, sub-business or project.
It is performed by professionals who prepare reports using ratios that make use of information taken from financial statements and other reports. These reports are usually presented to top management as one of their bases in making business decisions.
- Continue or discontinue its main operation or part of its business;
- Make or purchase certain materials in the manufacture of its product;
- Acquire or rent/lease certain machineries and equipment in the production of its goods;
- Issue stocks or negotiate for a bank loan to increase its working capital;
- Make decisions regarding investing or lending capital;
- Other decisions that allow management to make an informed selection on various alternatives in the conduct of its business.
Famous quotes containing the words financial and/or analysis:
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“Analysis as an instrument of enlightenment and civilization is good, in so far as it shatters absurd convictions, acts as a solvent upon natural prejudices, and undermines authority; good, in other words, in that it sets free, refines, humanizes, makes slaves ripe for freedom. But it is bad, very bad, in so far as it stands in the way of action, cannot shape the vital forces, maims life at its roots. Analysis can be a very unappetizing affair, as much so as death.”
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