talysis of Financial Statements: Introduction

nancial analysis indicates a company's relative strengths and weaknesses.

use this information to improve the firm's operations;

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use this information to evaluate whether

orrowers have the ability to pay off loans; and security analysts use this information to forecast earnings, dividends, and free cash flow. Financial analysis compares a firm's performance to other

ms 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: $(1)$

quidity, $(2)$ asset management, $(3)$ debt management, $(4)$ profitability, and $(5)$ market value.