2. ■ Understand the concept of Financial
Analysis
■ Discuss various tools for Financial
Analysis
Session Objectives
By the end of this class, we will be able to:
3. What is Financial Analysis?
Financial Analysis in Decision
Making
Tools of Financial Analysis
5. ▪ Karan is a student of finance in a college. His
father is a Chartered Accountant by profession.
He asked his father - I have learned how to
prepare Financial statements of a firm. His
father was happy to see his progress. His father
told him part from knowing how to prepare
financial statements, it is also important to
understand how to analyse the financial
statements. He further, explained that analysis
of financial statements is very useful to gain
necessary insights about the financial health of
the company as well as the future prospects.
▪ Let’s discuss more about the same.
Scenario
6. ▪ Financial Analysis is concerned with analysis
and interpretation to financial statements in
order to draw meaningful conclusions. It
includes establishing meaningful
relationship between various items of
financial statements
What is Financial Analysis?
8. What is Financial Analysis?
Financial Analysis in Decision
Making
Tools of Financial Analysis
9. ▪ Financial analysis is the process of correctly
establishing relationships between the
various items of the balance sheet and the
statement of profit and loss in order to
identify the firm's financial strengths and
weaknesses.
▪ Management of the company may conduct
financial analysis, or parties outside the
company, such as owners, trade creditors,
lenders, investors, labour unions, analysts,
and others, may do so.
Significance of Financial Analysis
10. ▪ Financial analysis plays a crucial role in
decision-making for individuals, businesses,
and organizations. Here's how financial
analysis is closely tied to decision-making:
Financial Analysis is Decision Making