Financial analysis is used to assess economic trends, establish financial guidelines, create long-term corporate activity plans, and pinpoint potential investment opportunities. This is accomplished by combining financial data with numbers. A financial analyst will carefully go over the income statement, balance sheet, and cash flow statement of a corporation. Both corporate finance and investment finance environments are suitable for conducting financial analysis.

Calculating ratios from the data in the financial statements to compare against those of other companies or against the company’s own historical performance is one of the most popular methods for analyzing financial data.