Financial Analysis Banking

Financial analysis is often referred to as accounting analysis or financial statement analysis. It generally means evaluating the consistency, profitability and the feasibility of any business organization. Proper financial analysis is done by qualified and skilled professionals who prepare accurate reports and balance sheets based on the financial statements provided by companies. The investment banking industry works including raising capital and security underwriting, mergers and acquisitions, sales and trading, retail and commercial banking. The said report is then placed in front of the top and senior level managers to assist them in formulating important business related decisions. Such decisions impact the future productivity and profitability of the organization. Hence, it is mandatory for a financial analyst to formulate a report with accurate data. Such business decisions include:

Investment Banking

• Buy or manufacture few raw materials in the production of certain products.
• Give out stocks and negotiate with a bank for a loan to be equipped with working capital
• Few essential decisions made by the management based on all the alternatives present
• To carry on or pause its main business or a certain part of it
• Rent or lease few essential machineries and tools which are required in the production of goods
• Financial decisions regarding lending or investing capital

Financial analysis of corporate banks is considered to be the most difficult one. Corporate banks require expert financial analyst who study the financial performance of the bank and how far the theoretical accounting procedures have been put to practice. By judging the competitive performance of the corporate banks for the last five years, financial analysts do a complete S.W.A.T analysis and determine how far the resources have been used completely. Analyst determines it with the help of two main sources:

With the help of primary data and secondary data the liquidity of the firm, efficiency in using the assets along with working capital management is determined. The liquidity of the firm encourages the investors to invest adequate capital in the different financial instruments of the corporate banking sector. This in turn increases the capital source of the firm. Financial analysis of the corporate banks helps an investor determine very easily how the assets of the firm are used in that year, if they have been used in the right manner and if adequate profits have been reaped from them or not. One of the most significant analysis which done by a analyst is the working capital management, which is determined by an analyst in his report, giving the investor a general view if the working capital requirements are met or not. Hence, it can be concluded that financial analysis of corporate banking is as essential as maintaining its balance sheet.

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