Scroll Top


    Financial Analysis

    What is Financial Analysis?

    Financial analysis is the method of reviewing companies, programs, expenditures, and other activities relevant to finance to assess their performance and appropriateness. Financial analysis is usually used to determine whether an enterprise is sufficiently stable, solvent, liquid, or competitive to warrant a monetary investment.

    Analysing Financial Analysis

    Financial analysis is used to assess economic trends, set monetary policies, build long-term business activity plans, and identify investment projects or companies. This is achieved using the financial numbers and data synthesis. A financial analyst must scrutinise the financial statements of a company—the statement of income, the balance sheet, and the statement of cash flow.

    One of the most common methods of evaluating financial data is to derive ratios from the data in the financial statements to be compared with those of other firms or against the past output of the company itself.

    Return on assets (ROA), for example, is a standard ratio used to determine how efficient a business is in using its assets and as a measure of profitability. For several companies in the same industry, this ratio could be calculated and compared with each other as part of the more significant analysis.

    Corporate Financial Analysis

    For corporate finance, the accounting department performs the research internally and shares it with management to enhance company decision-making. This form of internal analysis can involve ratios, such as Net Present Value (NPV) and Internal Return Rate (IRR), to identify projects worth carrying out.

    Several companies are extending credit to their customers. As a consequence, the cash refund from sales could be postponed for some time. This is helpful for businesses with large receivable balances to track unpaid days of sales (DSO), which helps the company determine the amount of time it takes to convert a credit transaction into cash.

    Popular Topics

    Latest Articles

    Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.

    Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.

    CAs, experts and businesses can get GST ready with Clear GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law.

    Save taxes with Clear by investing in tax saving mutual funds (ELSS) online. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Download Black by ClearTax App to file returns from your mobile phone.

    Cleartax is a product by Defmacro Software Pvt. Ltd.

    Company PolicyTerms of use


    ISO 27001

    Data Center


    SSL Certified Site

    128-bit encryption