We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Finance

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What Are the Different Types of Financial Analysis Tools?

Jim B.
By
Updated: May 17, 2024
Views: 6,196
Share

Financial analysis tools are different types of information and outside help used by investors to determine whether or not a potential investment is worthy. In most cases, these tools are used on different companies and their financial reports and balance sheets so that an investor can gauge the value of stocks. Other financial analysis tools at the hands of investors include financial ratios, which can be used to compare similar companies, and stock price statistical measurements, which can be used to spot potential trends in price movements. With most of these tools, either computer software or online financial firms can be utilized to perform this analysis and give the information to investors.

The process of choosing the proper investments can be a daunting one to people inexperienced with the stock market. Going it alone in such a situation is a scary prospect considering the fact that the money used for investments is usually crucial to the long-term financial health of potential investors. For those reasons, many investors seek a little help. Luckily, there is no shortage of financial analysis tools at their disposal.

Income reports and balance sheets provide much of the pertinent information for investors attempting to judge the financial strength of a particular company. Studying the current financial reports of a company alongside past reports can give an idea of whether a company is moving in the right direction or struggling. Financial ratios are effective financial analysis tools as well. These ratios take pieces of financial information and make an equation which can be used to highlight different aspects of a company's operations. Comparing these ratios to those of a benchmark company in the same industry is a good way to measure a company's status.

Other financial analysis tools have little to do with the financial statistics of a company but instead focus on the price movement of the stock they're offering. Many analysts feel that they can judge future price movement based on how the stock has performed in the past. Moving averages, which study the average price of a stock as it moves forward through time, can spot trends in the price of a particular stock.

While all of these financial analysis tools can be utilized by experienced investors without help, many newcomers can be confused by the terminology and processes involved. Those people may look to the help provided by an investment firm that offers its analysis services online. There are also many software programs which, once the requisite data is entered, can perform all of the necessary computations for the investor.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Jim B.
By Jim B.
Freelance writer - Jim Beviglia has made a name for himself by writing for national publications and creating his own successful blog. His passion led to a popular book series, which has gained the attention of fans worldwide. With a background in journalism, Beviglia brings his love for storytelling to his writing career where he engages readers with his unique insights.

Editors' Picks

Discussion Comments
Jim B.
Jim B.
Freelance writer - Jim Beviglia has made a name for himself by writing for national publications and creating his own...
Learn more
Share
https://www.wisegeek.net/what-are-the-different-types-of-financial-analysis-tools.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.