Question

List any three objectives of analysing financial statement?

Answer 1

Objectives of Financial Statements

The following are the various objectives for preparing financial statements.

1. It enables the conduct of meaningful comparisons of financial data. It provides better and easy understanding of the changes in the financial data overtime.
2. It helps in designing effective plans and better execution of plans by enabling control and checks over the use of the financial resources.
3. Analysis of Financial Statements helps to know the earning capacity and profitability of a business firm. It also measures the efficiency of the business operations.