Question

What is financial analysis

Answer 1

It is a form or technique to review and analyze the information presented in the financial statements, through the use of financial indicators more commonly known as ratios.


These analyzes can be vertical: Where 100% is assigned to the total sales or to the totals of the Asset and the Total of the Liabilities and Equity.

And it is from that point in the statement of financial position, it is determined that percentage of income or expenditure correspond to sales.

Likewise, 100% is assigned to the total assets and Total Liabilities, it is then determined which percentage represent the other parts of the aforementioned totals.

Horizontal analysis, this is used more comparing the items or items of the financial statements from one year to another.

The most used ratios are those of liquidity, Profitability and Solvency.

Answer 2

process of evaluating buisenesses projects and other finance related entietes to determine their performance