Definition of Financial Analysis



Financial analysis is the examination or comparison of financial information that can include financial statements, budgetary statements, forecasts, publications, quantitative and qualitative data to reach a sound and rational decisions about a business.

 


An investor wishing to invest in a company can do financial analysis based on the projections of the company, historical price movements and other market indicators to support his decision. A company may analyze the financial statements of a target company and produce a range of takeover bids that can be offered to the hostile company.

 


Management can also analyze its expenses over a time series to assess whether the spending is within budgetary limits or not and may decide to exclude an item to control the increased costs.


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