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The financial analysis is useful and common tool for investment and credit decision making in the business world

Finance Jan 15, 2021

The financial analysis is useful and common tool for investment and credit decision making in the business world.

a) Describe the different dimensions of this function

. b) Assess the limitations of accounting-based financial analysis compared to market based analysis.

c) How do you characterize this service or function in Palestine?

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Expert Solution

A. Financial analysis will be helpful in decision making as it will help in understanding of various capital budgeting decision making and it will help in investing for the longer period of time and maximization of rate of return so financial analysis will be studying the fundamentals for investing into the longer period of time and it is highly important for investment.

B. Market based financial analysis is more focused towards the market price, whereas accounting based fundamental analysis is more focused towards the book value which is not updated so market-based financial analysis is more adequate and it is more effective.

C. This will be helpful in various types of investment relating to companies in Palestine and they will be able to make investment related decision and capital budgeting decisions and other capital related decisions so it will help them in order to maximize the rate of return and benefit of shareholders.

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