Financial Statement Analysis

1 . The major purposes of financial statements

The major purpose of financial statement is to provide an overview of the company 's overall performance of the company 's operations and also assess the company 's worth during the year . Financial statement not only assists the financial managers but also the outsiders like creditors stockholders etc . After reviewing the financial statements of the company all the stakeholders assess the company growth , investment opportunity ,dividend profile etc after that note all the stakeholders made appropriate decisions regarding the firm 's future 's perspective

Financial statements are also helpful in submitting the tax return of the year (Besley , Brigham , 2001 . In basic terms financial statement is comprises on Profit Loss Statement , Balance Sheet , and on Statement of cash flows . There could be several reasons which signify the fact that it is gravely essential for one to understand the business or the industry in order to understand the financial statements better . Some of them may be

2 . The type of information financial statements provides

There are mainly three types of information is available in Profit Loss Statement , Balance Sheet , and Statement of cash flows . All the statements have own importance . Profit Loss Statement debates over the company 's revenue generation power , cost behavior and structure and in the end on Net Income . The balance sheet provides an overview regarding the company 's financial position . In the same time the balance sheet also discussed about the company 's assets , liabilities and owners equity . Cash flow...