Financial statement analysis is the process of analyzing a company’s financial statements for decision-making purposes. External stakeholders use it to understand the overall health of an organization as well as to evaluate financial performance and business value.

The goal is to identify the strengths and weaknesses in a company’s position, project its future cash flows and assess what the liabilities are worth.

The first step in doing this type of analysis is to gather all relevant information about a particular company from their various balance sheets, income statements, footnotes, etc.

The next step is to compare the company’s past financial performance with what it has projected for the future. The analysis goes both ways: if a company projects high growth, but their recent revenue and income figures are low, this indicates a problem that needs to be addressed.

A fundamental component of analyzing any business or organization involves forecasting its cash flows over time. This can help find potential problems before they become serious issues on either an operational level or in terms of financing (or lack thereof).

All stakeholders want the best possible return on investment from their assets which includes equity holders such as shareholders and bondholders; creditors like bankers who lend money; employees including managers and workers; local communities where the business operates, etcetera.