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Banking Industry Solutions

Financial Analyzer

Financial analysis refers to an assessment of the viability, stability and profitability of an enterprise. Financial analysts often compare financial ratios of solvency, profitability, growth, etc.

With Financial Analysis we can compare past performance across historical time periods for the same firm (the last 5 years for example) or future performance by using historical figures and certain mathematical and statistical techniques, including present and future values or comparative performance between similar firms. These ratios are calculated by dividing a group of account balances, taken from the balance sheet and / or the income statement, by another, for example:

  • Net income / equity = return on equity (ROE)
  • Net income / total assets = return on assets (ROA)
  • Stock price / earnings per share = P/E ratio

Financial Analysis is performed by professionals who prepare reports using ratios that make use of information taken from financial statements and other reports. These reports are usually presented to top management as one of their bases in making business decisions.