Financial statement analysis can be referred to as the analysis of financial reports like balance sheet etc. This analysis can be done quarterly or annually as per the business requirement. It helps to assess the past, current & future financial situations of the business.
Financial statement analysis can be done by analyzing accounting ratios like asset ratio, profitability ratio, liquidity ratio, turnover ratio etc.
Lets’ ascertain the benefits & loop wholes of financial statement analysis.
Benefits or information a business would get from this analysis are:
- The financial analysis provides enough information to an investor about the business health and helps to take the investing decision.
- This also shows whether the company using its investing money or capital in a proper way to generate more revenue or not
- Finance analysis can be termed as the best tool to assess the business performance in period wise i.e. quarterly and annually
- Finance analysis helps the business owner to find out the cash position subsequently taking the decision for applying loan or not
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