Financial analysis is a crucial aspect of evaluating the financial health and performance of a business. It involves the examination and interpretation of financial statements to make informed decisions. Let's break down the components of financial analysis:

Analysis of financial statements:
- This involves reviewing and assessing the financial statements of a company, including the balance sheet, income statement, and cash flow statement. Analysts examine the financial data to understand the company's profitability, liquidity, solvency, and overall financial position. They may calculate various financial ratios and metrics to evaluate the company's performance.

Interpretation of financial statements:
- Once the financial statements are analyzed, the next step is to interpret the findings. This process involves understanding the implications of the financial data and identifying key trends, strengths, weaknesses, and areas for improvement. By interpreting the financial statements, analysts can provide insights into the company's financial health and make recommendations for strategic decisions.

Both (a) and (b):
- Financial analysis includes both analyzing and interpreting financial statements. It is a comprehensive process that involves examining the financial data, drawing conclusions from the analysis, and communicating the findings to stakeholders. By combining these two components, analysts can provide a holistic view of a company's financial performance and help stakeholders make informed decisions.
In conclusion, financial analysis encompasses the analysis and interpretation of financial statements to assess the financial health and performance of a business. It is a critical tool for investors, creditors, and management to evaluate the company's financial position and make informed decisions.