Financial analysis is any economic activity in which time and money play a major role. Financial analysis can also be differentiated: at the micro level, only the enterprise is analyzed; at the macro level, the entire industry is analyzed. For a company, its overall financial situation is analyzed. This includes sufficient profitability, the company\’s capital, the efficient use of its assets, and its ability to pay its debts. All of this information is useful in raising resources, improving the financial structure, redistributing profits, and extending credit. Accounting plays an important role here by documenting accurate monetary figures, but these are somewhat isolated as they relate to only one period of time. Financial analysis is also used to identify deviations from a business\’s operating plan, and is used by business owners, managers, and creditors. It may also be used by government agencies and, in extreme cases, by ordinary employees. Business owners use it primarily for company profitability. They always hope that their investments will yield an effective return.
Business owners use financial analysis when developing financial plans for their businesses and when planning investments. Through financial analysis, they ensure higher performance and increase the value of the business. Lenders require a financial analysis of a business primarily to ensure that the business can repay its obligations to the lender. If not, their own business could be in jeopardy. Employees are interested in how much job security they have with the company and, above all, in their wages and social security. The state is interested in the financial condition of a company to ensure that taxes are paid correctly and to control market conditions
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