Question

On the basis of financial analysis, earning capacity of the enterprise cannot be assessed or computed.

• A. True
• B. False

Answer 1

The correct option is B False

False. On the basis of financial analysis, earning capacity of the enterprise can be assessed or computed. Financial analysis means analysing the financial statements of the firm to make financial decisions. It helps in assessing the earning capacity, present position, past performance, managerial efficiency and helps in inter-firm comparison.