question archive Why start a financial analysis with a study of wealth creation?
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Answer:
Financial analysis deals with money and the most important aspect is wealth creation. Everyone wants to create wealth and enjoy their success. Hence wealth creation is the most important part of financial analysis. Wealth is created when you are able to beat inflation and grow your money at positive real interest rates. In financial analysis, equity investment is one of the long term wealth creators with beating inflation. Hence an individual based on his risk appetite should be more invested in equity rather than in debt investments.