Corporate analysis is a broad term that describes the creation of an in-depth evaluation of a corporate entity. In most situations, the analysis will cover all aspects of the company, including finances, profit margins, organizational structure, and growth opportunities. The idea behind this type of detailed corporate analysis is to gain an understanding of the general corporate health and prospects for future growth of the corporation.
It is not unusual for a corporate analysis to systematically investigate each aspect of the company’s operation and seek to develop an opinion of the current efficiency of those aspects. From this perspective, the overall analysis can be viewed as a series of independent yet connected evaluations of each key element of the operation. Thus, it is possible to label subsections of the broad business analysis as beings a corporate operations analysis, a corporate risk analysis, or a corporate credit analysis. Together, these individual studies and evaluations come together to create a comprehensive quality analysis of the company.
There are several good reasons for conducting a corporate analysis internally. One of the main reasons is that the process of the analysis can often identify areas of the overall operation that could be enhanced in some manner to increase efficiency and productivity, which leads to the potential for a larger profit margin. The analysis can also sometimes identify policies and procedures connected with one aspect of the operation that would work equally well with some other division or department of the company. The analysis may also yield some inspiration for the modification of key products or the creation of new products as a means of gaining more market share.
Investors and industry analysts can also make constructive use of the independent corporate analysis of a given company. The analysis can yield important information about the current strength of the operation as well as provide valuable clues regarding the direction of the business and the prospects for becoming more profitable or more of an industry leader within a given market sector. From this perspective, a corporate analysis can be viewed as an essential tool that an investor can use to plan both short term and long term investment in the company.
Forward-looking companies conduct a structured corporate analysis on a regular basis. Depending on the structure of the company, the analysis may take place on an annual basis as part of the preparation for presentation to shareholders. In other instances, the analysis may be conducted annually or biannually as a means of evaluating and refining the general operations of the business.