Financial statements-based financial analysis

Financial analysis is an essential process for assessing a firm's performance in relation to its stated objectives, strategies, and prevailing market conditions. This note examines the two primary tools of financial analysis: ratio analysis and cash flow analysis, highlighting how these tools yield insights into profitability, growth, liquidity, and operational efficiency. By analyzing financial data through ratios and cash flows, analysts can gain a deeper understanding of how effectively a firm utilizes its resources, implements its strategies, and fulfills its financial obligations.