Financial institutions are an integral component of financing for many companies and industries today. Especially since, due to the economic crisis, many companies are no longer able to generate the revenues they recorded in the past. It is important for businesses to maintain up-to-date and accurate financial records. (Lawrence, 1983) These documents become an important part of the loan application package they submit to the lender. Financial institutions rely heavily on companies' audited financial statements to make their lending decisions. (Jones, 1996) The process used in financial institutions is credit analysis. Credit analysis is the process that lenders use to decide whether to allow a potential borrower to get a loan. (Lawrence, 1983) The process also determines the loan amount. The purpose of the analysis is to determine the likelihood that a potential borrower will default on the loan and the severity of the losses that could be incurred in the event of default. (DeYoung, Evans, Lam, & West, 2010) Essentially, the analysis process allows lenders to decide the creditworthiness of the business and guarantors. The summary of the process is to determine whether the loan can be repaid. (Jones, 1996) The function of analysis is performed by the credit analyst. The analyst is responsible for performing in-depth credit analysis and evaluating the risk/return ratio. (William, 2009). The review includes studying the loan proposal, assessing risk-bearing capacity, analyzing financial statements, forecasting trends, studying the repayment log, and a number of other tasks. The analyst is the lender and the potential borrower. (Williams, 2009)Companies that provide incomplete...... middle of paper......Works CitedBangs, David H., Jr. Managing by the Numbers: Financial Essentials for a Growing Business. Upstart Publishing, 1992.Clark, Scott. “You can read the tea leaves of financial reports.” Birmingham Business Newspaper. February 25, 2000. DeYoung, Robert, Evans, Paul, Lam, Pok sang and West, Kenneth. Journal of Money Credit and Banking Ranking: 2010: Business, Finance: 22/74; Economics: 88 / 304Gill, James O. Financial Basics of Small Business Success. Crisp Publications, 1994. Jones, Allen N. “Financial Statements: When Read Correctly, They Share a Wealth of Information.” Memphis Business Newspaper. February 5, 1996. Lawrence C. Galitz, (1983) "Consumer Credit Analysis," Managerial Finance, Vol. 9 Iss: 3/4, pp.27 - 33Williams, Rachel. “Credit Analyst Jobs.” 2009. Retrieved March 21, 2012, from Isnare: http://www.isnare.com/html.phb?aid=414771