Financial statement analysis is typically used to evaluate which aspect of an organization?

Financial statement analysis primarily focuses on evaluating the past financial condition of an organization. It involves examining historical financial data through balance sheets, income statements, and cash flow statements to assess the performance and overall financial health of the organization over a specific period.

By analyzing past financial statements, stakeholders—including management, investors, and creditors—can identify trends, measure profitability, and evaluate liquidity and solvency. Understanding these historical contexts is essential for making informed decisions regarding future performance and financial strategies.

While future financial conditions and investment opportunities are important for strategic planning, they typically require projections and forecasts based on historical data but are not directly assessed through financial statement analysis. Similarly, current operating effectiveness can stem from evaluating past performance, but it is focused primarily on historical results and trends rather than solely on current status.