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Significance of Financial Analysis

Which of the ...

Question

Which of the following are significance of Financial Analysis?

A

Assessing the earning capacity.

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B

Assessing managerial efficiency.

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C

Inter-firm Comparison.

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D

All of the above

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Solution

The correct option is D All of the above
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.

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

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Q. Comparative statement when prepared for comparing the enterprise's financial statements with that of another enterprise, is known as Inter-firm comparison.

Q. Which of the following statement is true?
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