Financial analysis indicates a company's relative strengths and weaknesses. use this information to improve the firm's operations and stock price; use this information to evaluate whether borrowers have the ability to pay off loans; and security analysts use this information to forecast earnings, dividends, and stock prices. Financial analysis compares a firm's performance to other firms in the same industry and evaluates trends in the firm's financial position over time. are the tools used in financial analysis and they are grouped into five categories: (1) Liquidity, (2) asset management, (3) debt management, (4) profitability, and (5) market value