"Financial analysis (also known as financial statement analysis, accounting analysis, or analysis of finance)."
Understanding key financial concepts and metrics such as revenue, profit margins, and return on investment.
Industry Overview: Having an understanding of the general industry landscape is important. Learning about the history, size, and major players in the industry will provide a foundation for further learning.
Company Analysis: Understanding what the company does and its financial performance is crucial in financial analysis. Revenue streams, market share, profitability, and financial ratios should all be considered in company analysis.
Market Trends and Outlook: Keeping up to date with emerging trends in the market can help a financial analyst make better predictions about future trends and potential investments.
Economic Analysis: Economic factors such as interest rates, inflation, unemployment, and GDP growth can affect a company's performance. Understanding these factors and their impact is important in assessing risk and making informed decisions.
Financial Ratios: Financial ratios are important tools for evaluating a company's financial health. Learning how to calculate and interpret ratios such as debt-to-equity, current ratio, and gross profit margin is essential.
Industry Metrics: Depending on the industry, there may be specific metrics used to evaluate a company's performance. For example, in the tech industry, metrics such as monthly active users (MAUs) and churn rate may be relevant.
Regulatory Environment: Staying up to date with the latest regulations and potential changes can help a financial analyst anticipate changes in the industry and their impact.
Competitive Analysis: Understanding a company's competitors, their market share, and financial performance can help a financial analyst make informed decisions and anticipate trends.
Financial Statements: Basic knowledge of financial statements such as the income statement, balance sheet, and cash flow statement is essential in financial analysis.
Valuation Techniques: Valuation is the process of determining the value of a company or its assets. Learning about valuation techniques such as discounted cash flow (DCF) analysis, earnings multiples, and net present value (NPV) can help a financial analyst make informed investment decisions.
Project Management: While not directly related to financial analysis, a basic understanding of project management can be helpful in coordinating financial analysis projects and ensuring their success.
Risk Assessment: Understanding and assessing risk is crucial in financial analysis. Learning about different types of risk and how to mitigate them is important.
Data Analysis: As data becomes increasingly important in financial analysis, learning about data analysis tools and techniques can be helpful in analyzing financial data.
Financial Instruments: Certain financial instruments such as derivatives, options, and futures can be complex. Understanding the basics of these instruments can help a financial analyst make informed decisions about investment opportunities.
Taxation: Taxation can impact a company's financial performance. Learning about the tax system and how it affects businesses is important in assessing the overall financial health of a company.
Ratio analysis: It involves analyzing financial ratios like debt to equity ratios, quick ratios, efficiency ratios, and profitability ratios to determine a company's financial performance.
Trend analysis: It involves analyzing a company's financial information over different time periods to identify trends and patterns.
Comparative analysis: It involves comparing financial data from different companies within the same industry to identify their strengths, weaknesses, and performance relative to their peers.
Fundamental analysis: It involves analyzing a company's financial and economic prospects by examining its financial statements, management, industry trends, and economic indicators.
Quantitative analysis: It involves applying statistical models and mathematical techniques to analyze financial data and create predictive financial models.
Technical analysis: It involves analyzing stock prices and trading volumes to identify patterns and trends that can be used to make investment decisions.
Risk analysis: It involves analyzing financial data to identify and assess the potential financial risks facing a company, such as market risk, credit risk, and operational risk.
Valuation analysis: It involves estimating the value of a company's stocks or bonds based on financial data and economic indicators.
"It is performed by professionals who prepare reports using ratios and other techniques."
"These reports are usually presented to top management as one of their bases in making business decisions."
"Assessment of the viability, stability, and profitability of a business, sub-business, or project."
"Information taken from financial statements and other reports."
"Financial analysis may determine if a business will continue or discontinue its main operation or part of its business."
"Make or purchase certain materials in the manufacture of its product."
"Acquire or rent/lease certain machinery and equipment in the production of its goods."
"Issue shares or negotiate for a bank loan to increase its working capital."
"Make decisions regarding investing or lending capital."
"Make other decisions that allow management to make an informed selection on various alternatives in the conduct of its business."
"Determining if a business will continue or discontinue its main operation."
"Deciding whether to make or purchase certain materials."
"Acquire or rent/lease certain machinery and equipment in the production of its goods."
"To increase its working capital."
"Deciding whether to invest or lend capital."
"Allow management to make an informed selection on various alternatives in the conduct of its business."
"Also known as financial statement analysis, accounting analysis, or analysis of finance."
"Professionals prepare reports using ratios and other techniques."
"These reports are usually presented to top management."