# 4.5: Introduction to Analyzing Data from Financial Statements

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## What you will learn to do: Analyze data from Financial Statements

Measuring a company’s financial performance is one of the primary reasons for the creation of financial statements.

The key financial statements of a company provide a snapshot of the financial position of the organization and this is extremely useful to the internal and external stakeholders of the business. However, the real power of financial statements lies in our ability to analyze the information on these financial statements to evaluate the past and present financial position of the company.

Financial statement analysis allows us to determine the health of the business in terms of how well it manages its inventories, expenses, revenues and debt. Analyzing these financial statements also gives us the ability to compare the financial health of the business against other companies in the same industry. In this section you will learn how companies report items such as inventories, assets, stockholder equity, revenues and expenses on their financial statements.