Financial analysis is an area of finance function that examines data in order to summarize information on the finances of an organization. It transforms financial data into a form that can be used to evaluate the organization's financial position and to plan future financing. The analysis employs techniques such as financial statement analysis and funds flow analysis and often uses financial ratios. Its main goal is to provide the information needed by the management to make decisions.
The most important tasks of financial analysis include:
- assessing the efficiency with which funds are employed in the organization,
- analyzing the efficiency of its operations
- assessing the value and safety of debtors' claims against the organization's assets.