Question

What Is Meant by 'analysis of Financial Statements'? State Any Two Objectives of Such an Analysis.

Answer 1

Analysis of financial statements refers to the thorough and comprehensive analysis of the financial statements of a company in order to understand the significance of data contained in them.

Objectives of analysis of financial statements are:

1. It enables designing of effective plans and also execution of such plans by maintaining effective control over the financial resources.
2. It provides the opportunity for meaningful comparison of financial data.

Also read:

• Financial Statements MCQs
• Uses and Importance of Financial Statements
• Tools of Analysis of Financial Statements
• 6 Limitations of Financial Statements

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