How to choose Financial Analysis Tools

Financial Analysis can be defined as the process of discovery– identifying financial strengths and weaknesses of any particular business by establishing a solid relationship between the nuances of balance sheets and income statements. The process of financial analysis allows identification of KPI’s like liquidity, solvency, profitability, as well as the efficiency of operations in a business, as well as short term and long term prospects of a business may be evaluated. This allows identification of financial weaknesses in the business, the intent being to arrive at forecasts and recommendations to achieve those forecasting goals allowing the future of the business to be rosy and bright.
Financial analysis tools give you the ability to focus on the financial statements– as they are a disclosure of the financial performance of a business entity. A financial statement is an organized collection of data according to logical and consistent accounting procedures. Its purpose? To convey information and provide understanding of some of the financial aspects of a business firm. It can show allocation of assets at any given moment in time, or may reveal a series of activities over a long period of time, like in an income statement.
The need to evaluate the past performance, present financial position, and the liquidity of assets is a recurring need for businesses everywhere…and financial analysis tools can assist in the forecasting of future prospects for the organization, and providing easy access to the various financial statements that need to be examined in order to properly and accurately make earnings forecasts and track long term progress of the company.