• EXECUTIVE PROGRAMME IN INVESTMENT BANKING AND CAPITAL MARKETS
  • ADVANCED MANAGEMENT PROGRAM IN FINANCIAL SERVICES AND CAPITAL MARKETS
  • IIM Indore Postgraduate Certificate Programme for Emerging CFOs
  • POSTGRADUATE PROGRAM IN BANKING AND FINANCE
  • PGP in New Age Banking
    Co-created with Imarticus Learning
    4.8 out of 5 by 669 learners
    4x Industry Demand
  • POST GRADUATE DIPLOMA IN MANAGEMENT
    Co-created with BIMTECH
    4.8 out of 6071 learners
    2x industry demand
  • MBA in Investment Banking
    Co-created with Jain University
    4.5 out of 5 by467 learners
    2x industry demand
  • MBA in Fintech
    Co-created with Jain University
    4.4 out of 5 by 349 learners
    2x industry demand
  • MBA (Distance) in Banking and Finance with NGASCE
    Co-created with NMIMS
    4.7 out of 5 by 669 learners
    4x Industry Demand
  • Post Graduate Program in Banking and Credit Underwriting
    4.7 out of 5 by 1376 learners
    12 X industry demand

Financial statements analysis is the process of reviewing and analysing a company's financial statements to make better economic decisions. In other words, financial analysis is the process of determining the financial strengths and weaknesses of the entity by establishing the strategic relationship between the items on the balance sheet, profit and loss account, and other financial statements.

Why financial analysis is important?

Financial analysis helps the company understand its financial condition. It is also useful to learn the creditworthiness, profitability, and ability to generate wealth. Therefore it gives a more in-depth look at how well it operates internally. 

The analysis of financial statements is crucial for the following reasons.

  1. The shares investment and holding

Shareholders own the company; such investments happen with repeated transfers and shares. Time and again, they may have to decide on whether to continue based on the price, profit, and reliability factors. Therefore, a company's analysis of the financial statement is crucial to making decisions. As it reflects all information that is meaningful to the shareholder's decision process.

  1. Plans, decisions, and management

Financial statement analysis is essential for a company's decisions, planning, and management. As a result, the company management makes smart and intelligent calls on investment plans. These are backed by data analytics when planning for a bright future and maximum profits accrual.

Thus, compared to statements in the recent past, the future goals and predicted performances are endemic to the decision-making of shareholders, companies, and analysts.

  1. Providing credit

Shareholders offer loans to the company as its capital. The decision to provide and extend capital credit is based on a financial examination. The examination is based on the company's financial statements and performance over time. All capital loans carry an interest rate and determine the best rate. They are also a part of the decision process in making credit loans to companies.

  1. Decisions on investments

Investors with surplus investable capital always look for opportunities to place their funds as investments in profitable and profit-potential companies. Before investing such capital funds, investors look at the past performance and predicted profits

What is the objective of conducting a financial analysis of your company?

Financial analysis is used to evaluate businesses, projects, budgets, and other finance-related transactions to determine their performance and suitability. Typically, financial analysis is done to analyse whether an entity is stable, solvent, or liquid.  It also checks the profitability to warrant a monetary investment.

What is the role of a financial analyst? 

The financial analyst's job is to use the company's financial statement data and records. They analyse them and understand the company's strengths, financial position, and weaknesses.

How to do a financial analysis of a company?

  1. Check the financial statements

A company's balance sheets and income statement reflect the profits, losses, and earning potential over a given period. The liabilities, assets, capital, debt positions, and such financial data are vital to budget, plan, and ensure profitability.

  1. a Capital statement

Current assets, liabilities, and working capital statements of the previous and present year help track the expenses and working capital changes. This is a helpful factor in budgeting, evaluation, and strategy planning.

  1. Comparative statements

Size-revealing statements of multiple companies help one understand and compare the current position against the others in the industry.

  1. Analysis of ratios

This method is helpful in asset management, liquidity, debt management, market value, the financial performance of the various departments, and profitability of the business parts.

Financial analysis tools

Data is the foundational backbone of the analysis. A lot depends on the inferences drawn from data in the financial records, the type of decision-making involved, and your analysis of financial information.

Using such parameters for constructive feedback and financial analysis makes the software a crucial tool. In addition, tools should have the potential to give a clear, concise, and personalised analysis.

What software tools are used by financial analysts?

Investors prefer the stock screener by finviz and customised financial analysis by the big bench. On the other hand, accountants, bookkeepers, and managers/analysts favor SWOT analysis by providing software and cloud storage tools and software. 

The VBA macro tool in Microsoft Excel continues to be the foundational and most widely used tool for beginners. And, especially for those who use simple but effective solutions to function.

Management tools and cloud storage reporting software like balanced scorecard can help assess the overall returns. It helps to assess the current position, capital financing, analysis of specific firm processes, performance history, and operating income. 

Prevision's EPM financial reporting is also widely used and rated as a good tool for enterprise management. It is also used in the maintenance of report books/accounts and for budget analysis combined with real-time data from various IT departments.

QlikView, SAS, and MATLAB are preferred for customisable financial analysis and include statistical analysis accounting tools in their sophisticated software. It is an excellent tool for analysts, traders, and programmers.

Key take away

To make a career in financial analysis, then the financial analysis course at Imarticus Learning can help you. You can learn the best tools for assessing the company's financials, weaknesses, reliability, profit potential, and financial strength.

Imarticus Learning's course is particularly advantageous to career-makers. As it includes the certification, robust global curriculum, and an industry-relevant project involving real-time live data. In addition, hands-on practice on popular tools, and excellent industry-relevant mentorship kick-starts your career from day one.

Related Articles:

Short-Term Finance Courses Can Catalyze Your Career Growth
Why Are Financial Markets Courses Gaining Popularity?
Financial Modelling: The Breakthrough Of The New Generation Finance Trends

For Online Course Enquiries
About Imarticus
Imarticus Learning is India’s leading professional education institute that offers training in Financial Services, Data Analytics & Technology. We’ve successfully transformed careers of over 35,000+ individuals globally through our Certification, Prodegree, and Post Graduate programs offered in association with leading and renowned global organisations in the Financial Services, Data Analytics & Technology domain.
Related course
  • Certification
    EXECUTIVE PROGRAMME IN INVESTMENT BANKING AND CAPITAL MARKETS
    Course duration(year)
    1
    Upcoming batches
    1
    Organizations enrolled
    20
    Upcoming Batches
    Date Location Schedule
    Date Location Schedule
  • Advanced Management Program
    ADVANCED MANAGEMENT PROGRAM IN FINANCIAL SERVICES AND CAPITAL MARKETS
    Course duration(hours)
    126
    Upcoming batches
    1
    Organizations enrolled
    20
    Upcoming Batches
    Date Location Schedule
    Date Location Schedule
  • Postgraduate Program
    IIM Indore Postgraduate Certificate Programme for Emerging CFOs
    Course duration(Months)
    12
    Upcoming batches
    1
    Organizations enrolled
    20
    Upcoming Batches
    Date Location Schedule
    Date Location Schedule
  • Postgraduate
    POSTGRADUATE PROGRAM IN BANKING AND FINANCE
    Course duration(months)
    4
    Upcoming batches
    1
    Organizations enrolled
    20
    Upcoming Batches
    Date Location Schedule
    Date Location Schedule
  • Placement Program
    PGP in New Age Banking
    Co-created with Imarticus Learning
    Course duration(Months)
    24
    Upcoming batches
    1
    Organizations enrolled
    20
    4.8 out of 5 by 669 learners
    4x Industry Demand
    Upcoming Batches
    Date Location Schedule
    8th Jan 2022 Live Instructor - Led Training Online
    Date Location Schedule
  • Finance
    POST GRADUATE DIPLOMA IN MANAGEMENT
    Co-created with BIMTECH
    Course duration(Months)
    24
    Upcoming batches
    1
    Organizations enrolled
    20
    4.8 out of 6071 learners
    2x industry demand
    Upcoming Batches
    Date Location Schedule
    3rd August Live Instructor - Led Training Online
    Date Location Schedule
  • Recent Graduates
    MBA in Investment Banking
    Co-created with Jain University
    Course duration(Months)
    24
    Upcoming batches
    1
    Organizations enrolled
    20
    4.5 out of 5 by467 learners
    2x industry demand
    Upcoming Batches
    Date Location Schedule
    31st July ONLINE Online
    Date Location Schedule
  • Recent Graduates
    MBA in Fintech
    Co-created with Jain University
    Course duration(Months)
    24
    Upcoming batches
    1
    Organizations enrolled
    20
    4.4 out of 5 by 349 learners
    2x industry demand
    Upcoming Batches
    Date Location Schedule
    31st July ONLINE Online
    Date Location Schedule
  • Placement Program
    MBA (Distance) in Banking and Finance with NGASCE
    Co-created with NMIMS
    Course duration(Months)
    24
    Upcoming batches
    1
    Organizations enrolled
    20
    4.7 out of 5 by 669 learners
    4x Industry Demand
    Upcoming Batches
    Date Location Schedule
    8th Jan 2022 Live Instructor - Led Training Online
    Date Location Schedule
  • Post Graduate
    Post Graduate Program in Banking and Credit Underwriting
    Course duration(6)
    Upcoming batches
    1
    Organizations enrolled
    20
    4.7 out of 5 by 1376 learners
    12 X industry demand
    Upcoming Batches
    Date Location Schedule
    3rd August MUMBAI Online
    Date Location Schedule