The focus of this master’s thesis is on the use of financial statement analysis in financial due diligence (”FDD”). Due diligence refers to the examination of a potential target company before an acquisition for understanding its value and underlying risks. There is no single regulated or common method for due diligence process and there is relatively little research with regard thereto. In turn, financial statement analysis can be perceived in the context of financial accounting, serving the stake-holders of a company. The public financial statements form the most important re-ports in financial accounting. The stakeholders analyse the financial statements in connection with their decision-making. Financial statement analysis recognises and measures the components of financial performance as well as compares companies to each other and the performance of one company over time. There is no established method to conduct a financial statement analysis. The contents of financial statements may be affected by the aims and motives of its author, based on which the informative value of unadjusted financial statements for its user can be questioned. In order to increase the informative value, the information contained in the financial statements must be modified (adjusted). The research questions of this thesis are how can financial statement analysis be utilised in financial due diligence and what kind of observations regarding the use of financial statement analysis methods can be made from FDD reports. The theoretical framework of this thesis contains literature regarding research on financial statements, financial statement analysis and due diligence. In turn, the empirical data of this thesis comprises 20 FDD reports compiled by a certain consulting company. The reports have been analysed using qualitative content analysis and thematic mapping. The key conclusion on the theoretical framework is that financial statement analysis is or at least it should be a focal method in FDD. As for the empirical data, the observations made suggest that financial statement analysis is in fact used during an FDD. It is evident from the fact that the financial statement information as well as information from internal accounting provided by the target company are adjusted before calculating EBITDA, net working capital and net debt.