Financial analysis tools

Financial analysis tools

Financial analysis

Financial analysis, accounting analysis of financial data, accounting analysis and financial analysis, an accounting term that discloses the entity's viability, stability, and profitability in the light of its business, and specialists prepare financial reports based on ratios Extracts from data arising from financial statements and accounting reports.

This financial process is important for conducting a comprehensive assessment of the company's business or other activity. It also understands risk and profitability by analyzing financial information, particularly financial audit reports, and annual and seasonal reports.

It is noted that the stage of financial analysis is the next stage of the financial audit process, depending on the study of financial reports prepared by the financial auditor prepared and prepared in preparation for conclusions related to them, and thus study the investment project in all dimensions of production, which are accessed based on data systems and ratios and statistics that Extract from documented reports.

Objectives of financial analysis

• Assisting the financial auditor in deciding whether or not to proceed with the main operation.

• Motivate the auditor to make a decision about whether or not to buy certain materials to make a product.

• Make a positive decision among the equipment rental or purchase options.

• To make a final decision on issuing shares or negotiating with a bank for the purpose of raising working capital by obtaining a loan.

• Stability on a final decision on lending or investing in capital.

Financial analysis tools

Techniques of Financial Statement Analysis, the auditor relies on a number of analysis tools to perform this accounting process. The required tool is used according to the degree of analysis required for the available accounting data, including:

• Horizontal Analysis: The horizontal analysis focuses on the study of changes in the elements of the financial statements during a particular financial period. The amounts and rates of change are also the focus of the financial auditor's need to use this comparative tool to help measure the percentage of changes in the elements The amounts are thus disclosed as a result of analysis and changes.

• Vertical Analysis is also known as the relative distribution of financial statement items, which focuses primarily on measuring the impact and existence of each element in the financial list in the underlying value of the same list, which is used as a basic method for measuring the relative distribution of The financial list contains elements.
  

• Ratio Analysis is the most important tool among financial analysis tools, and is also the most widely used among financial auditors. This tool focuses on relying on financial ratios to measure the relationships between the elements of the financial statements and their values.

By Imane Alhayari