What is the Meaning of: Financial analysis | Concept and Definition of: Financial analysis
An analysis is to distinguish and separate the parts of a whole for its elements and its principles. This is the examination which is carried out a likely reality of intellectual study.
This analysis allows to study the limitations, the characteristics and possible solutions to a problem.
Financial, on the other hand, is an adjective regarding finance, a concept related to the public Treasury, assets and flows. The concept of finance is used to denote the study of the movement of money between individuals, companies or States.
The financial analysis is therefore a method for analyzing the financial implications of the decisions in the business world. To this end, should apply techniques that allow to gather relevant information, evaluate a series of things and draw conclusions.
Thanks to financial analysis, it is possible to estimate the performance of an investment, to study the risks and know if a company cash flows are sufficient to deal with the payments, among other issues.
Financial analysis helps to understand the operation of the business and maximize profitability from the performance of existing resources. Managers can access information about the expected effect of strategic decisions.
Investors also involve financial analysis to analyze the level of risk of their decisions and to set targets to achieve. Lenders and creditors, finally, use financial analysis to determine what the existing risk to retrieve money a credit or a loan.