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Financial Analysis

What is Financial Analysis? Definition and meaning

The basis of a financial analysis consists of the balance sheet, the profit and loss statement, and the annual report of a company.

Tasks of Financial Analysis

Using this data, accounting examines, for example, how economically a company operates. In addition, the financial analysis provides information about the success and liquidity, i.e. the solvency, of a company.

Internal and External Financial Analysis

A financial analysis can be prepared on a voluntary basis, e.g. for internal purposes. However, it is also relevant on a statutory basis for authorities, e.g. tax offices.

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Frequently asked questions

Which data forms the basis of a financial analysis?
The basis is a company’s balance sheet, its profit and loss statement and its annual report. Using these figures, accounting, for example, assesses how economically the company operates.
What is the difference between internal and external financial analysis?
An internal financial analysis is prepared voluntarily for a company’s own purposes. An external one is relevant on a statutory basis for authorities such as tax offices. Both rely on a company’s financial accounting.
What does a financial analysis tell you?
A financial analysis provides information about the success and liquidity, that is, the solvency, of a company and shows how economically it operates.