Financial Management Analysis The application of Statistical Analysis and Data Mining techniques for the forecasting of companies’ profitability and future trends Sherif Mahgoub * Yasser ELSHAYEB ** Abstract Financial and accounting literature has been confirming for so long, and in almost every single book or article, that financial statements are historical based not future based. That they are all reflecting values of the ended year while nothing is mentioned for the coming year! At the same time Statistical Data Analysis, Artificial Intelligence, and Data Mining techniques are revealing great efforts in pattern recognition as a first step in building forecasting models. Although many researchers around the world proved some statistical relationships between historical and future financial data for the purpose of forecasting future trends of a corporation, the innovation part of this paper is the use of several data mining techniques coupled with statistical data analysis in order to analyse historical data of five hundred Egyptian companies, and try to show if the use of these techniques could reveal any general applicable models. Such models could be used by local as well as foreign investors. Though, the main objective of this paper is to study the capability of forecasting the net profit for a corporation using modern forecasting techniques like the artificial intelligence and in particular the neural network, in addition to other traditional statistical forecasting techniques, and depending on historical financial statements and its contents (current assets, current liabilities, equity, expenses, return on capita, etc.). As mentioned earlier, Almost Five hundred “audited” financial statements has been collected from the “Cairo and Alexandria Stock Exchange (CASE)” for the years 2002 and 2003, and these collected data are tabloid, verified, and cleaned. By applying different data analysis / data mining techniques (Correlation, PCA, FA, MDA, MANOVA, Linear Regression, Logistic Regression, Clustering, Neural Networks, CBR, etc.) on the collected data, we were able to draw some conclusions on the forecasting of the profitability of such companies in the Egyptian market, and to draw some conclusions on the state of the market in general. * Financial Operations Accountant, USAID, Cairo -Egypt ** Faculty of Engineering, Cairo University, Giza, 12613 Egypt. Tel: +20 (10) 6044698, email: yasser.elshayeb@link.net