What is credit analysis and financial analysis?

Credit analysis is associated with the decision to grant credit to a customer. It is also part of a bank’s lending procedures for making a loan and monitoring the borrower’s creditworthiness.

I believe that financial analysis has a broader focus than credit analysis. Financial analysis would also include calculations such as return on equity, return on assets, price earnings ratios, dividend yield, comparisons with industry averages, trend analysis, and so on. Financial analysis would often be associated with investors, management, and creditors.

Financial ratios are one of the 30 topics explained on AccountingCoach.com, a free website to help improve your financial literacy.

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