What do you call the process of reviewing and comparing financial data to make decisions?

The process of reviewing and comparing financial data to make informed decisions is known as financial analysis. This involves evaluating a company’s financial statements—such as the balance sheet, income statement, and cash flow statement—to assess its performance, profitability, and potential for growth. Financial analysis helps stakeholders identify trends, measure efficiency, and make predictions about future financial outcomes. It is a crucial tool for decision-making in both personal finance and corporate environments, allowing managers and investors to evaluate the financial health of an organization.

In contrast, accrual accounting refers to the method of accounting that records revenues and expenses when they are incurred, regardless of when cash transactions occur. Bookkeeping involves the recording of financial transactions, which is a part of the broader financial analysis process but is not itself an evaluative exercise. Cost accounting focuses specifically on analyzing the costs of producing goods or services to determine profitability and efficiency but does not encompass the full spectrum of financial data comparison and decision-making involved in financial analysis.