Can I understand factor analysis in the following way?
Assume I have 5 independent variables (A,B,C,D,E)
Factor analysis allows me to make (D,E) to be dependent variables and allow me to make them to be linear combinations of (A,B,C).
Therefore I will only need to carry (A,B,C) data and the $\Lambda$ matrix, then I can recreate data (D,E) by data(A,B,C) and the $\Lambda$ matrix .
It does data reduction only. Am I right?