Introduction

Definition

Company analysis is a process carried out by investors to evaluate securities, collecting information on the company’s profile, products and services as well as profitability. It is also referred as ‘fundamental analysis.’

A company analysis covers basic information about the company, starting with its history, events which have contributed in shaping the company and also its mission statement, goals and values.

Also, a company analysis looks into the goods and services offered by the company. In case of a manufacturing company, the analysis covers a study of the products of the products and also analyzes the demand and quality of these products. In case of a company operating in the service sector the analysis focuses on the services rendered by the company.

It is essential for a company analysis to be comprehensive and thorough evaluation of an organization to obtain strategic insight. The company analysis provides insight to rationalize processes and improve revenue potentials. The process of conducting a company analysis involves the following steps.

  • To determine the type of analysis which would work best for the company?
  • Implement the selected method for conducting the financial analysis. It is important for the analysis to include internal and external factors affecting the business.
  • All the major findings should be supported by use of statistics.
  • The final step involves reviewing the results. The weaknesses are then attempted to be corrected. The company analysis is used in concluding issues and determining the possible solutions. The company analysis is conducted to provide a picture of the company at a specific time, thus providing the best way of enhancing a company, internally as well as externally.

Need and Purpose of Company Analysis

Company analysis helps in understanding the internal workings of the company and its relationship with the external environment. The need for the analysis is to assess whether in the following areas a company has competitive advantage and what are the sources for it.

  • Financial Management
  • Strategy
  • Marketing
  • Technology

Each of these can also be negative that identifies a potential weakness of the company.

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