Companies can use these to make business decisions such as where to allocate resources and which unit to shutter. Insurance companies and credit rating agencies could use the techniques of financial analysis to assess various risksĥ. Auditors and regulators may use these to sniff out possible discrepancies in a company’s financial statement or business dealingsĤ. Banks can make decisions on the solvency of a business and its creditworthiness using these toolsģ. They are used by valuation professionals to advise on mergers and acquisitionsĢ. Here’s a short list of interesting use cases of the tools of financial analysis :ġ. However, these methods have far wider use beyond just the stock market. To make sense of the numbers one must employ the methods of financial statement analysis to extract valuable insights into the company’s performance. It’s not enough to pore over a company’s financial statement. This is where the tools of financial analysis come handy. It is important to understand how well a business is doing and where it is headed in the short and the long term while investing in the share market. Why are the tools of financial analysis required?

Tools for data analysis finance