Financial report analysis is a process which involves various
techniques to review and evaluate the company's financial
statements. These financial statements include Balance sheet,
Profit and loss statement and other reports which are
generated using the inflow and outflow of the company. The
analysis provides the user's with an understanding of the
company's financial health. This is mostly undertaken to help
the organization take vital business decisions. It is necessary for
every organization to maintain financial data in the desired
format, this data is analyzed using techniques which are
beneficial for the shareholders, managers, employees and any
other interested parties.
Analysis of a financial report is undertaken by experts who use
various different analysis technique like- Ratio analysis, vertical
analysis, horizontal analysis and find out relevant information
from them. The data used is past and present statements
which are analyzed mostly to see what the future has in store
for the organization. Mostly more than one year of data is
used to make the analysis fruitful and reliable.