What should a business analyze to make informed financial decisions?

A business should analyze historical data, current trends, and competitive analysis to make informed financial decisions because this comprehensive approach provides a well-rounded understanding of the market and the business's position within it.

Historical data helps identify patterns and trends that can inform future financial forecasting. By examining how past decisions affected outcomes, businesses can learn from successes and mistakes. Current trends, on the other hand, enable businesses to adapt to the ever-changing market conditions, which is crucial for maintaining competitiveness and relevance.

Competitive analysis offers insights into how other businesses operate, what strategies they employ, and how they respond to market changes. By understanding the strategies that competitors use and their effectiveness, a business can better position itself for success.

Together, these elements create a robust framework for making informed decisions that can lead to improved financial performance, rather than relying solely on limited data points such as current sales data, marketing strategies, or customer feedback. Such a holistic view is essential for sustainable growth and profitability.