Financial Analysis Definition | Investopedia

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DEFINITION OF 'FINANCIAL ANALYSIS'

The process of evaluating businesses, projects, budgets and other finance-related entities to
determine their suitability for investment. Typically, financial analysis is used to analyze
whether an entity is stable, solvent, liquid, or profitable enough to be invested in. When
looking at a specific company, the financial analyst will often focus on the income statement,
balance sheet, and cash flow statement. In addition, one key area of financial analysis
involves extrapolating the company's past performance into an estimate of the company's

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BALANCE SHEET

RISK

INCOME STATEMENT

CHARTERED FINANCIAL
ANALYST - CFA

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BREAKING DOWN 'FINANCIAL ANALYSIS'

One of the most common ways of analyzing financial data is to calculate ratios from the data
to compare against those of other companies or against the company's own historical
performance. For example, return on assets is a common ratio used to determine how
efficient a company is at using its assets and as a measure of profitability. This ratio could be
calculated for several similar companies and compared as part of a larger analysis.

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RELATED TERMS
Balance Sheet

A financial statement that summarizes a

company's assets, liabilities ...

Cash Flow Statement

Trading Center

One of the quarterly financial reports any

publicly traded company ...

http://www.investopedia.com/terms/f/financial-analysis.asp

20-11-2015

Financial Analysis Definition | Investopedia

Return On Assets - ROA

Risk

Income Statement

Chartered Financial Analyst - CFA

An indicator of how profitable a company is

relative to its total ...

A financial statement that measures a

company's financial performance ...

The chance that an investment's actual

return will be different ...

A professional designation given by the CFA

Institute (formerly ...

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http://www.investopedia.com/terms/f/financial-analysis.asp

20-11-2015