What is Financial Analysis?

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What is Financial Analysis?
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• In a more technical and adjusted definition,
  financial analysis is the person in charge of
  studying the financial data of a company or a
  legal person. Its main objective is to interpret
  this data to study the financial situation of the
  company and thus know aspects such as
  profitability, liquidity, or risk.
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• In addition, he uses his skills and knowledge to
  have an overview of the situation in the
  financial sector, based on the merger and
  acquisition conditions of the moment to get an
  idea of how the market will evolve in the near
  future.
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• The ultimate goal of the financial analyst is to
  help his client make economic decisions based on
  his study, such as buying or selling shares, or
  even knowing if a marketing campaign is going to
  be effective or not.

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• Functions of a Financial Analysis
• Analyze financial data. You will analyze the
  state of your clients accounts in order to know
  what decisions to make in the future.
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• Merger and Acquisition strategies In order to
  achieve an increase in income, and at the same
  time reduce expenses and possible risks, the
  financial analyst must draw up a plan to follow
  according to the merger and acquisition of the
  clients accounts and their studies on the
  market.
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• Choose future investments Based on previous
  studies, the analyst will be clear about what to
  invest in within the company. Not only the
  purchase or sale of shares but what steps the
  company must follow to continue growing.

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• Monitoring of operations At all times you must
  keep track of the transactions that occur with
  your client.
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• Prepare financial statements In order to achieve
  the previous point, you must make various reports
  on a monthly, quarterly, and/or annual basis in
  order to show your client how their finances are
  going.
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• Control over investments In addition to
  correcting actions that have been carried out and
  do not work, you should keep track of the
  investments made and analyze the monthly profits.
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• Market evolution You will need to closely
  monitor how the financial market is evolving.

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• Sometimes companies hire external financial
  analysts to study the effectiveness of specific
  actions, such as a marketing campaign. Analysts,
  who must always keep up to date with current
  developments in the field in which they
  specialize, establish where the strengths and
  weaknesses of a business organization and a line
  of a business lie, while also making profit and
  loss forecasts.
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• Importance of Financial Analysis
• Todays financial analysis carries out their
  professional work in very diverse sectors and in
  many business areas. Companies that have one or a
  department of analysts can belong to very
  different fields, from pension funds to insurance
  companies, not to mention other fields such as
  construction or the technology industry, to give
  different examples. These professionals are
  essential in companies that handle large amounts
  of assets, where they play a crucial role in
  gathering the information necessary to make
  decisions and develop new strategies.

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