Financial Analysis: A Step-by-Step Guide

The process involves assessing the financial performance of a business and its situation, usually by looking at its financial statements as well as other relevant information. Financial analysis can help investors as well as lenders and management make informed decisions regarding the financial health of a business as well as potential risks and potential growth opportunities. It also assists in identifying any red flags that could indicate concerns.
There are many types of financial analysis. These include:
Vertical analysis compares the financial statements with previous period or industry benchmarks.
Horizontal analysis is a method of comparing financial statements with a common base year.
Ratio analysis that compares financial statement elements to one other or against industry benchmarks.
There are a variety of crucial financial ratios frequently employed in financial analysis which include… GO TO THE NEXT PAGE TO CONTINUE…