In many organizations, some of the functions of financial management are integrated with accounting and economics functions. These finance-oriented departments usually work in concert with other departments within the firm. For example, the development of a new product takes the joint efforts of Production Management, Marketing, and Finance personnel to identify the new product, plan its production and distribution, and assess the future benefits of the new product for the business enterprise. For more detailed descriptions of the financial management functions within a business enterprise, check out the Association for Financial Professionals web site . Financial analysis is a tool that involves evaluating the financial condition and operating performance of a business enterprise.
Financial analysis requires an evaluation of the firm, the firm's industry, and the economy.
Within the firm, financial analysis may be used not only to evaluate the performance of the firm, but also of its divisions or departments and its product lines. Analyses may be performed both periodically and as-needed, not only to ensure informed investment and financing decisions, but also as an aid in implementing personnel policies and rewards systems. Regardless of the particular area of finance, the financial manager needs to understand decision making in all areas of finance. The banker needs to understand the financing decision of the small business. The security analyst needs to understand the effect of interest rates on corporations' investment decisions.