At a glance
- Based on key financial statements: balance sheet, income statement, and cash flow statement.
- Different types of analysis: internal, external, static, dynamic, quantitative, and forensic.
- Calculation and interpretation of key KPIs such as equity ratio, liquidity, and profitability.
- Business intelligence enables integrated, flexible, and real-time financial analysis.
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Financial analysis definition
Financial analysis is the systematic examination and evaluation of financial data to assess the financial health of a company, organization, or project. The key questions are how well a company is performing, how capable it is of meeting its financial obligations, and how its financial position is likely to develop in the future.
The analysis typically draws on key financial statements such as the balance sheet, income statement, and cash flow statement. External factors, such as industry-specific developments and broader economic conditions, are also taken into account.
Financial analysis provides decision-makers with a basis for investments, strategic planning, and risk assessment. It can be conducted internally, for example as part of controlling, or externally by banks, investors, and analysts.
„We consolidate our financial data from several source systems with DeltaMaster and can trace the balance sheet and income statement down to the individual transaction. Analyzing our profitability now takes minutes instead of hours.“Head of Controlling
Industrial company
What types of financial analysis are there?
Financial analyses can differ significantly depending on the criteria used. Some of the most important types of financial analysis include:
| Type | Description | Typical users |
|---|---|---|
| Internal | Focuses on internal company data for controlling and financial planning | Controllers, CFOs, management |
| External | Evaluates the company from the perspective of external stakeholders | Banks, investors, analysts |
| Static | Assesses financial data at a specific point in time | Financial statement analysis |
| Dynamic | Examines financial developments across multiple periods | Trend analysis, forecasting |
| Quantitative | Analyzes financial data based on metrics and numerical data | All levels of analysis |
| Forensic | Identifies irregularities, financial statement manipulation, or fraud | Auditors, regulatory authorities |
- Internal financial analysis: Focuses on internal company data, for example for controlling and financial planning to support management decisions.
- External financial analysis: Examines company data from the perspective of external stakeholders such as banks, investors, and business partners as a basis for investment, lending, or ownership decisions.
- Static financial analysis: Assesses financial data at a specific point in time.
- Dynamic financial analysis: Examines financial developments across multiple periods.
- Quantitative financial analysis: Analyzes key financial metrics and financial data to provide objective insights into a company’s financial health.
- Forensic financial analysis: A specialized examination designed to uncover irregularities, financial statement manipulation, money laundering, or fraud.
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How does financial analysis work?
Financial analysis consists of several steps that build on one another. A typical approach includes the following:
- Establishing the data foundation: Financial analyses are based on relevant financial information such as profit and loss, cash flows, and other internal and external financial data.
- Selecting the right methods: Depending on the question being addressed, analysts may use static or dynamic methods, internal or external analyses, quantitative models, or other approaches.
- Using digital tools: Modern financial analysis tools, AI-powered software, and business intelligence provide deeper insights and accelerate the necessary structuring, cleansing, and consolidation of data.
- Conducting the analysis: Calculates the KPIs relevant to the question at hand, such as equity ratio, liquidity, profitability, or debt-to-equity ratio.
- Interpreting the results: The results can then be analyzed to identify risks and opportunities, assess financial stability, and derive forecasts.
- Reporting and taking action: Results are prepared for decision-makers, and concrete measures are derived for financial planning, controlling, or risk management.
What are the key metrics used in financial analysis?
| KPI | Meaning | Analysis area |
|---|---|---|
| Equity ratio | Share of equity in total capital | Capital structure |
| Debt-to-equity ratio | Ratio of debt to equity | Financing structure |
| Liquidity ratios | Ability to service short-term liabilities | Liquidity |
| EBIT / EBITDA | Operating result before interest and taxes | Earning power |
| Net profit margin | Percentage profit after all costs | Profitability |
| Return on Investment (ROI) | Return on capital employed | Investment efficiency |
| Cash flow | Actual cash flows | Liquidity and financial strength |
| Contribution margin | A product's contribution to covering fixed costs | Result structure |
Using business intelligence in financial analysis
Business intelligence (BI) makes financial analysis more efficient. Instead of having to work through scattered spreadsheets or rigid reports, companies can use BI to establish a centralized data foundation and access flexible analysis capabilities. This makes it possible not only to review financial metrics retrospectively, but also to use them for forecasting and strategic decision-making.
Typical benefits and applications of BI in financial analysis:
- Comprehensive data foundation: BI integrates financial data from different sources, such as ERP and CRM systems, creating a complete picture of the company’s finances.
- Data visualization: Graphical representations make complex figures easier to understand and reveal trends or anomalies at a glance.
- Flexible data analysis: Ad hoc analyses make it possible to investigate spontaneous questions directly and with minimal effort.
- Data-driven decisions: Access to current, consolidated data enables patterns and trends to be identified quickly, making a significant contribution to both operational and strategic decision-making.
BI software such as DeltaMaster or Power BI helps companies bring together financial data from different sources, display it interactively, and analyze it in depth so they can use financial analysis strategically.
Practical example: Financial analysis with DeltaMaster
A mid-sized company with three business units notices in its quarterly closing that overall profitability falls short of expectations – without it being immediately clear which unit is the main driver.
With DeltaMaster, the financial analysis is set up in a structured way: data from ERP and accounting is integrated automatically, and KPIs such as EBIT margin, contribution margin and liquidity ratios are calculated according to a consistent logic. The controller navigates via drill-down from the overall level down to the business unit, product and customer level – and identifies: one business unit shows a sharply increased cost ratio, attributable to unplanned extraordinary depreciation.
DeltaMaster highlights the variance automatically, phrases it in natural language and makes it possible to simulate the impact and countermeasures. An hour of manual analysis turns into a guided, data-based process of insight in minutes.
Bissantz and financial analysis
With Bissantz, financial analysis becomes an integral part of modern, metrics-driven corporate management. DeltaMaster and DeltaApp enable users to analyze financial metrics from a wide range of source systems in a consolidated, real-time environment — from the balance sheet to cash flow reporting, and from operational forecasting to strategic planning.
For small and medium-sized businesses, the Bissantz Finance Solution offers a standardized solution for all system landscapes: Over 150 source systems—from SAP and DATEV to Sage and Microsoft Dynamics—can be automatically connected and harmonized. Income statements and balance sheets are available with drill-down capabilities down to individual journal entries, including management consolidation across multiple companies. This creates a reliable, constantly up-to-date database for reporting, analysis, and planning—without data disconnects and without a time-consuming integration project
Anyone seeking support with the implementation or further development of professional financial analyses will find the right point of contact in our BI and Analytics consulting services—from selecting the right structures and methods to user-friendly integration into controlling.
| Function | Benefit |
|---|---|
| Consolidated real-time analysis | analyze financial key figures from various source systems in real time |
| Connection of more than 150 source systems | connect and harmonize systems such as SAP, DATEV, Sage, or Microsoft Dynamics in an automated manner |
| Drill-down to the individual posting | trace the P&L and balance sheet from the overall level down to the individual posting |
| Management consolidation | combine and analyze multiple entities across the board |
| Role-based dashboards | provide reporting, analysis, and planning tailored to finance departments |
„With the consolidated metrics in DeltaMaster, we immediately identify variances across all entities and can take targeted countermeasures. This makes our financial analysis more reliable and always up to date.“Commercial Director
Trading company
Frequently asked questions
What is financial analysis in simple terms?
Financial analysis is a structured look at a company’s numbers: How much does it earn? How liquid is it? How is it financed? The answers provide an assessment of the company’s financial health and serve as a basis for investments, planning, and decision-making.
What is the difference between internal and external financial analysis?
Internal financial analysis uses detailed company data for controlling and strategic planning and serves management. External financial analysis is based on publicly available reports and provides banks, investors, and analysts with a basis for lending or investment decisions.
Which financial statements form the basis of financial analysis?
The three key documents are the balance sheet, which shows assets and capital structure; the income statement, which shows financial performance; and the cash flow statement, which shows actual cash flows. Together, they provide a comprehensive picture of a company’s financial situation.
How does Bissantz support financial analysis in practice?
DeltaMaster automatically integrates financial data, calculates metrics using consistent logic, and presents variances visually and in natural language. AI-powered features explain underlying causes and suggest actions, while drill-downs enable navigation all the way to the individual transaction level — supporting well-founded financial analysis at every level.
Does Bissantz also offer consulting for financial analysis?
Yes, Bissantz also offers consulting services for financial analysis. Our data analytics consulting helps companies design high-performance analyses—regardless of the data or functional areas involved. We have already helped numerous clients make their financial analyses more efficient and meaningful.
Summary
Financial analysis is at the heart of data-driven corporate management: It makes a company’s financial health transparent, comparable, and relevant to decision-making. From balance sheet analysis to cash flow forecasting, and from profitability assessment to investment planning, financial analysis provides the foundation for well-founded, forward-looking decisions. With DeltaMaster, Bissantz makes this process more efficient, more automated, and more in-depth—as an integrated component of modern corporate management.