What is financial analysis?

Financial analysis is an investigation and interpretation of financial statements and related financial reports. Trained and certified accountants usually complete this type of analysis. The task of financial analyst is to use computer software, standard conditions and other proven calculations to analyze your account activity and identify areas of strength and weakness. The ratios and tools used vary according to the purpose of the analysis and the intended audience. The overall role of financial analysis is to identify formulas, opportunities, weakness and strength in business operations.

Internal analysis is also called management analysis. This role is responsible for the operation and control of the monthly and annual financial activities. They examine details in a particular area of ​​the company and prepare summary reports for higher management.

Financial reporting is crucial to identifying money and resources, monitoring internal revenue sources and comparing real results with budgets and predictions. Weak internal financial analysisAnd it can lead to overvoltage or cannot capture a key market share due to lack of cash flows and poor planning. Transactions in these areas can be reviewed in detail using software tools for audit or financial analysis. All financial transactions have an impact on the reported account value. Comprehensive analysis often reveals fraudulent activities due to their impact on the financial statements.

Financial analysis is also completed by external agencies, from potential investors to financial institutions. These parties usually use the financial statements as a source of information. The area of ​​financial analysis is relatively mature, with a wide range of calculations used to explore transactions in the company's financial reports. They can also emphasize areas that are inconsistent and reveal accounting errors.

In formal audit financial statements auditors complete analytical exercises to verify informationMACE in statements. In addition to the actual audit of transactions, the company allows the company to provide an opinion on the financial stability and longevity of the company. Both of these functions add the value of the audit message.

Accounting experts are obliged to complete intermediate and advanced analyzes. In addition, they also complete statistics, data management and computer systems. The combination of these skills allows them to quickly and precisely understand and interpret the results of the analysis.