Process of evaluating a company’s financial statements to understand its financial health and performance. It involves using historical data and financial metrics to make informed decisions about investments, budgeting, and management strategies.

𝐊𝐞𝐲 𝐓𝐞𝐫𝐦𝐬 𝐢𝐧 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐀𝐧𝐚𝐥𝐲𝐬𝐢𝐬:
🧾 𝐈𝐧𝐜𝐨𝐦𝐞 𝐒𝐭𝐚𝐭𝐞𝐦𝐞𝐧𝐭: Also known as the Profit and Loss (P&L) statement, it shows a company’s revenue, expenses, and profits over a period.
📈 𝐁𝐚𝐥𝐚𝐧𝐜𝐞 𝐒𝐡𝐞𝐞𝐭: A snapshot of a company’s financial position, highlighting assets, liabilities, and equity at a specific point in time.
💰 𝐂𝐚𝐬𝐡 𝐅𝐥𝐨𝐰 𝐒𝐭𝐚𝐭𝐞𝐦𝐞𝐧𝐭: It tracks the inflow and outflow of cash, showing how well a company manages its liquidity.
📊 𝐑𝐚𝐭𝐢𝐨 𝐀𝐧𝐚𝐥𝐲𝐬𝐢𝐬: The use of financial ratios (like P/E ratio, ROE, Current Ratio) to assess profitability, efficiency, liquidity, and solvency.
📉 𝐄𝐁𝐈𝐓𝐃𝐀: Earnings before interest, taxes, depreciation, and amortization – a measure of a company’s operating performance.
📊 𝐍𝐏𝐕 & 𝐈𝐑𝐑: Key concepts in evaluating investment decisions by analyzing future cash flows.

𝐖𝐡𝐲 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐀𝐧𝐚𝐥𝐲𝐬𝐢𝐬 𝐢𝐬 𝐈𝐦𝐩𝐨𝐫𝐭𝐚𝐧𝐭?
🚀 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐃𝐞𝐜𝐢𝐬𝐢𝐨𝐧𝐬: Helps investors decide where to put their money based on a company’s financial health.
📈 𝐁𝐮𝐬𝐢𝐧𝐞𝐬𝐬 𝐏𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐄𝐯𝐚𝐥𝐮𝐚𝐭𝐢𝐨𝐧: Assists management in assessing profitability, liquidity, and efficiency.
🛡️ 𝐑𝐢𝐬𝐤 𝐌𝐚𝐧𝐚𝐠𝐞𝐦𝐞𝐧𝐭: Identifies potential financial risks and provides strategies to mitigate them.
🔍 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐜 𝐏𝐥𝐚𝐧𝐧𝐢𝐧𝐠: Guides long-term decisions, ensuring a business remains sustainable and competitive.

𝐈𝐧𝐭𝐞𝐫𝐩𝐫𝐞𝐭𝐚𝐭𝐢𝐨𝐧 𝐨𝐟 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐀𝐧𝐚𝐥𝐲𝐬𝐢𝐬:
☪️ 𝐏𝐫𝐨𝐟𝐢𝐭𝐚𝐛𝐢𝐥𝐢𝐭𝐲: Look at metrics like Net Profit Margin and Return on Equity (ROE) to evaluate how efficiently a company turns revenue into profit.
🥃 𝐋𝐢𝐪𝐮𝐢𝐝𝐢𝐭𝐲: Use ratios like the Current Ratio and Quick Ratio to assess a company’s ability to meet short-term obligations.
🤌 𝐒𝐨𝐥𝐯𝐞𝐧𝐜𝐲: The Debt-to-Equity Ratio can help determine how much of a company’s operations are funded by debt versus equity.
🫑 𝐄𝐟𝐟𝐢𝐜𝐢𝐞𝐧𝐜𝐲: Analyze metrics like Asset Turnover Ratio and Inventory Turnover to see how effectively a company uses its resources.

🔑 𝐓𝐚𝐤𝐞𝐚𝐰𝐚𝐲: It provides insights that drive better decision-making for both investors and businesses. Understanding key terms and interpretation techniques is critical for successful financial planning.

💡 𝐈𝐧𝐭𝐞𝐫𝐞𝐬𝐭𝐞𝐝 𝐢𝐧 𝐥𝐞𝐚𝐫𝐧𝐢𝐧𝐠 𝐦𝐨𝐫𝐞? 𝐅𝐞𝐞𝐥 𝐟𝐫𝐞𝐞 𝐭𝐨 𝐫𝐞𝐚𝐜𝐡 𝐨𝐮𝐭 𝐨𝐫 𝐜𝐨𝐦𝐦𝐞𝐧𝐭 𝐛𝐞𝐥𝐨𝐰!