Financial analysis

Abstract

Understanding the basics of financial analysis is crucial in the business world, no matter what area a manager is working in. Managers from marketing, production, HR, IT and fináncé should be aware of how they contribute to the shareholder value through their activities. Fór example, marketing managers should consider customer loyalty, brand equity or product life cycle, which have an impact on the sustainability of sales and profits. Operations managers should follow how production ties up Capital and how asset use can be done more efficiently to generate sales. Financial managers should keep an eye on the corporate financial health before making decisions about future investments, Capital structure and dividend policy. All these corporate fields should be integrated intő the financial analysis and planning which is important fór making sound decisions about the future operations, investments and financing of a firm. Corporate fináncé covers three types of decisions (Figure 1).