Financial analysis is the conversion of financial data into useful information for decision making. Therefore, virtually any use of financial statements or other financial data for some purpose is financial analysis and, essentially, is the primary focus of accounting and finance professionals. Financial analysis can be internal (e.g., decision analysis by a company using internal data to understand or improve management and operating results) or external (e.g., comprehensive analysis for such purposes as commerical lending or investment activities). The key is how to analysis available data to make correct decisions.
The financial statements of a company are developed from the bookkeeping process of the business firm. As the firm records the financial transactions of the firm over an accounting time period, the financial statements begin to appear. They are developed through recording the transactions in the accounting journal and the general ledger. The financial statements come together from those records. The financial statements are based on the accounting equation.
References:
http://acct.tamu.edu/giroux/finhistory.html
http://bizfinance.about.com/od/yourfinancialposition/qt/Relation_FinSt.htm