Financial analysis

Financial Analysis

Financial analysis (pronunciation: /fɪˈnænʃəl əˈnælɪsɪs/) is a process of evaluating businesses, projects, budgets, and other finance-related entities 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.

Etymology

The term "financial analysis" comes from the Latin word financia, meaning "payment", and the Greek word analusis, meaning "a breaking up".

Related Terms

• Financial Statement Analysis: It involves the examination of both the relationships among financial statement numbers and the trends in those numbers over time.
• Ratio Analysis: It is a quantitative analysis of information contained in a company’s financial statements.
• Cash Flow Analysis: It refers to the examination of a company's cash inflows and outflows during a specific period.
• Profitability Analysis: It is an area of financial management that involves examining the revenue and costs to determine whether a company is generating a satisfactory profit.
• Liquidity Analysis: It is the ability of a company to pay off its short-term debts as they are due.

See Also

• Financial Planning
• Financial Management
• Investment Analysis
• Risk Analysis

References

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