Assess the profitability and risk of the firm using information in the financial statement. Most financial analysts assess the profitability of a firm relative to the risks involved. Assessments of most recent profitability provide a basis for projecting likely future profitability and thus the likely future returns from inverting in the company. Assessments of a firm’s ability to deal with risks, particularly those elements of risk with measurable financial consequences, permit the analyst to estimate the likelihood that the firm will experience financial difficulties in the future.