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What is Financial Analysis?

In a more technical and adjusted definition, financial analysis is the person in charge of studying the financial data of a company or a legal person. Visit here: https://bit.ly/3Dwva8T

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What is Financial Analysis?

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  1. What is Financial Analysis?

  2. In a more technical and adjusted definition, financial analysis is the person in charge of studying the financial data of a company or a legal person. Its main objective is to interpret this data to study the financial situation of the company and thus know aspects such as profitability, liquidity, or risk. In addition, he uses his skills and knowledge to have an overview of the situation in the financial sector, based on the merger and acquisition conditions of the moment to get an idea of how the market will evolve in the near future. The ultimate goal of the financial analyst is to help his client make economic decisions based on his study, such as buying or selling shares, or even knowing if a marketing campaign is going to be effective or not.

  3. Functions of a Financial Analysis Analyze financial data. You will analyze the state of your client’s accounts in order to know what decisions to make in the future. Merger and Acquisition strategies: In order to achieve an increase in income, and at the same time reduce expenses and possible risks, the financial analyst must draw up a plan to follow according to the merger and acquisition of the client’s accounts and their studies on the market. Choose future investments: Based on previous studies, the analyst will be clear about what to invest in within the company. Not only the purchase or sale of shares but what steps the company must follow to continue growing.

  4. Monitoring of operations: At all times you must keep track of the transactions that occur with your client. Prepare financial statements: In order to achieve the previous point, you must make various reports on a monthly, quarterly, and/or annual basis in order to show your client how their finances are going. Control over investments: In addition to correcting actions that have been carried out and do not work, you should keep track of the investments made and analyze the monthly profits. Market evolution: You will need to closely monitor how the financial market is evolving.

  5. Sometimes companies hire external financial analysts to study the effectiveness of specific actions, such as a marketing campaign. Analysts, who must always keep up to date with current developments in the field in which they specialize, establish where the strengths and weaknesses of a business organization and a line of a business lie, while also making profit and loss forecasts. Importance of Financial Analysis Today’s financial analysis carries out their professional work in very diverse sectors and in many business areas. Companies that have one or a department of analysts can belong to very different fields, from pension funds to insurance companies, not to mention other fields such as construction or the technology industry, to give different examples. These professionals are essential in companies that handle large amounts of assets, where they play a crucial role in gathering the information necessary to make decisions and develop new strategies.

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