Leverage analysis, assessing growth rates, profitability analysis and liquidity analysis are four common types of financial analysis used by businesses. Read more: https://www.robtolley.com/the-importance-of-financial-analysis-for-business-growth/

1. Leverage Analysis, Growth
Leverage Analysis, Growth
Rates, Profitability Analysis
Rates, Profitability Analysis
and Liquidity Analysis
and Liquidity Analysis
FINANCIAL ANALYSIS:
Rob Tolley

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Leverage Analysis, Growth Rates,
Profitability Analysis and Liquidity
Analysis
Leverage analysis, assessing growth rates, prof-
itability analysis and liquidity analysis are four
common types of financial analysis used by busi-
nesses.
Leverage Analysis
Leverage ratios are commonly used by analysts to
evaluate a business’s performance. Specific met-
rics are compared to the business’s total equity
to obtain a fuller picture of the underlying capi-
tal structure. Ratios frequently used in a leverage
analysis include debt/equity, debt/EBITDA and
EBIT/interest. Dupont analysis may also be de-
ployed, which assesses a combination of ratios,
including liquidity and leverage.
Growth Rates Analysis
Analysing past and current growth rates and
projecting future rates is a key part of a finan-
cial analyst’s role. Assessing growth rates can
be undertaken in several ways, including on a
year-over-year basis, a regression analysis, a bot-
tom-up analysis or a top-down analysis.
Financial
Analysis

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A profitability analysis is a type of income
statement analysis in which an analyst looks at
the profitability (or otherwise) of a business.
Profitability Analysis
A profitability analysis is a type of income state-
ment analysis in which an analyst looks at the
profitability (or otherwise) of a business. Com-
mon elements assessed as part of such an anal-
ysis include the gross margin, EBITDA margin,
EBIT margin and net profit margin.
Liquidity Analysis
This type of financial analysis focuses on the
business’s balance sheet and, particularly, the
business’s ability to meet its short-term obliga-
tions.

4. For more information about this topic, visit the blog of Rob Tolley.
ROB TOLLEY