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Using Financial Analysis to Assess and Improve Business Performance

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Please provide three examples of how financial analysis can be used to assess and improve business performance. How do financial analysis tools help managers and their companies?

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Financial analysis implies evaluation of the performance of the business in such a way that the maximum return can be attained from the investment made in the business. Financial analysis highlights the weaknesses in the business, and therefore steps can be taken to remove the weaknesses. Financial analysis will provide both internal and external information to the managers. Examples of tools used for financial analysis are: ratio analysis, trend analysis, comparative income statement, common size statements, balance score card, etc.

Ratio analysis informs the managers about the financial performance of the company. For example, if ...

Solution Summary

This solution provides three examples of how a financial analysis can be used to assess and improve a business's performance, including how exactly financial analysis tools help managers and the companies they are affiliated with.