Fjármálagreining

Fjármálagreining is the Icelandic term for financial analysis. It is the process of evaluating businesses, projects, budgets, and other finance-related entities to determine their performance and suitability. Financial analysis is used by investors, creditors, and internal management to make informed decisions.

The primary goal of financial analysis is to assess the financial health and performance of an entity. This involves examining various financial statements, such as the balance sheet, income statement, and cash flow statement. Analysts look for trends, ratios, and key performance indicators (KPIs) to understand profitability, liquidity, solvency, and efficiency.

Common techniques used in financial analysis include ratio analysis, which compares different financial figures to derive insights, and trend analysis, which examines financial data over time to identify patterns. Common ratios include the current ratio for liquidity, the debt-to-equity ratio for solvency, and the net profit margin for profitability.

Financial analysis helps in identifying strengths and weaknesses, detecting potential risks and opportunities, and forecasting future financial performance. It is a critical tool for strategic planning, investment appraisal, creditworthiness assessment, and operational efficiency improvements. For investors, it aids in deciding whether to buy, sell, or hold a particular security. For creditors, it helps in determining the risk associated with lending money. Management uses it to monitor business performance and make operational adjustments.