Financial statement analysis involves examining a company's financial reports to assess its health, performance, and profitability, focusing on liquidity, profitability, solvency, and efficiency. It is part of a broader business analysis that includes strategic and operational evaluations. Key tools include ratio analysis, trend analysis, and common-size analysis. Understanding the interconnections between the balance sheet, income statement, cash flow statement, and statement of shareholders' equity is crucial for comprehensive analysis. Additionally, qualitative characteristics such as relevance, reliability, and comparability are essential for effective financial reporting and analysis.