what is the meaning and definition of financial analysis?
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Financial analysis is the process of evaluating businesses, projects, budgets, and other finance-related transactions to determine their performance and suitability. Typically, financial analysis is used to analyze whether an entity is stable, solvent, liquid, or profitable enough to warrant a monetary investment.
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In the context of corporate financial reporting, the income statement summarizes a company's revenues (sales) and expenses, quarterly and annually, for the fiscal year. The final net figure and other numbers in the statement are of major interest to investors and analysts.
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So what does this mean? Qualitative analysis means looking at the intangibles. The factors about a company that are not purely numbers driven can be just as important as crunching the numbers. Quantitative analysis means looking at and the actual numbers.
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Meaning, Nature and Objectives of Financial Statements. The financial statements of a company reflect a true picture of its financial performances. They depict not only profits and losses, but also assets and liabilities. It is only at the end of all accounting processes that we can generate these statements.
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Financial ratios are relationships determined from a company's financial information and used for comparison purposes. ... Usually these measurements or account balances are found on one of the company's financial statements—balance sheet, income statement, cashflow statement, and/or statement of changes in owner's equity.
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A financial analyst researches macroeconomic and microeconomic conditions along with company fundamentals to make business, sector and industry recommendations. They often recommend a course of action, such as to buy or sell a company's stock based upon its overall current and predicted strength.
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Financial Accounting includes recording, summarizing, reporting and analyzing financial data. ... The article lists down the major limitations of accounting.
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A financial forecast is an estimation, or projection, of likely future income or revenue and expenses, while a financial plan lays out the necessary steps to generate future income and cover future expenses.
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Financial Analyst duties and responsibilities Analysing current and past financial data. Looking at current financial performance and identifying trends. ... Developing financial models and providing financial forecasts. Developing initiatives and policies that may improve financial growth.
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Fundamental analysis (FA) is a method of measuring a security's intrinsic value by examining related economic and financial factors. ... The end goal is to arrive at a number that an investor can compare with a security's current price in order to see whether the security is undervalued or overvalued.
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Financial information is the conclusions drawn from analysis of financial data. While an account balance is an example of data, the patterns of transactions within the account hold a wealth of information (pun intended). ... Several pieces of financial information live within this pattern.
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Types of financial analysis is analyzing and interpreting data by various types according to their suitability and the most common types of Financial Analysis are vertical analysis, horizontal analysis, leverage analysis, growth rates, profitability analysis, liquidity analysis, efficiency analysis, cash flow, rates of ...
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feasibility analysis an analysis of the viability of a business idea that includes four interrelated components: an industry and market analysis, the product or service analysis, a financial analysis, and an entrepreneur analysis.
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Decision analysis is a systematic, quantitative, and visual approach to making strategic business decisions. ... Risk, capital investments, and strategic business decisions are areas where decision analysis can be applied. Decision trees and influence diagrams are visual representations that help in the analysis process.
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Statistics is a term used to summarize a process that an analyst uses to characterize a data set. If the data set depends on a sample of a larger population, then the analyst can develop interpretations about the population primarily based on the statistical outcomes from the sample.
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An income statement reports a business's revenues, expenses and overall profit or loss for a specific period of time. It's one of the three major financial statements that small businesses prepare to report on their financial performance, along with the balance sheet and the cash flow statement.
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Technical analysis is a trading discipline employed to evaluate investments and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement and volume. ... Technical analysis can be used on any security with historical trading data.