If financial analysis is carried out internally, it can help fund managers make future business decisions or analyze historical trends of past success.
When conducted externally, financial analysis can help investors select the best possible investment opportunities.
Fundamental analysis and technical analysis are the two main types of financial analysis.
Fundamental analysis uses ratios and financial statement data to determine the intrinsic value of a security.
Technical analysis assumes that the value of a security is already determined by its price and instead focuses on trends in value over time.