Financial Statement Analysis

The process of reviewing and evaluating a company’s financial statements (such as the balance sheet or profit and loss statement), thereby gaining an understanding of the financial health of the company and enabling more effective decision making. Financial statements record financial data; however, this information must be evaluated through financial statement analysis to become more useful to investors, shareholders, managers and other interested parties.

Financial statement analysis is an evaluative method of determining the past, current and projected performance of a company. Several techniques are commonly used as part of financial statement analysis including horizontal analysis, which compares two or more years of financial data in both dollar and percentage form; vertical analysis, where each category of accounts on the balance sheet is shown as a percentage of the total account; and ratio analysis, which calculates statistical relationships between data.


Investment dictionary. . 2012.

Look at other dictionaries:

  • financial-statement analysis — Analysis of the financial statements of a company to assess its position and performance. The standard analysis will consider the business from the perspectives of managerial performance, liquidity, and stock exchange performance. See accounting… …   Big dictionary of business and management

  • financial statement analysis — An analysis of the financial statements of a business to assess its performance and position. Ratios are normally calculated from the financial statements to assess the profitability, solvency, working capital management, liquidity, and capital… …   Accounting dictionary

  • financial statement analysis — Evaluation of a firm s financial statements in order to assess the firm s worth and its ability to meet its financial obligations. Bloomberg Financial Dictionary …   Financial and business terms

  • financial statement analysis — examination of a business financial data in order to determine its economic situation …   English contemporary dictionary

  • Common Size Financial Statement — A company financial statement that displays all items as percentages of a common base figure. This type of financial statement allows for easy analysis between companies or between time periods of a company. The values on the common size… …   Investment dictionary

  • Financial statements — (or financial reports) are formal records of a business financial activities. In British English, including United Kingdom company law, financial statements are often referred to as accounts, although the term financial statements is also used,… …   Wikipedia

  • Financial modeling — is the task of building an abstract representation (a model) of a financial decision making situation.[1] This is a mathematical model designed to represent (a simplified version of) the performance of a financial asset or a portfolio, of a… …   Wikipedia

  • Financial ratio — Corporate finance …   Wikipedia

  • financial analysis — Analysis of a company s financial statement, often by financial analysts. Bloomberg Financial Dictionary * * * financial analysis financial analysis ➔ analysis * * * financial analysis UK US noun [U] FINANCE ► the study of financial information… …   Financial and business terms

  • statement of cash flows — USA statement of cash flows, Also known as cash flow statement. In financial accounting, a financial statement that shows a company s incoming and outgoing money (sources and uses of cash) during a time period (often quarterly or annually). The… …   Law dictionary

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.