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How the ‘Earning Capacity of a business is assessed by Financial Statement Analysis? - Accounts

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Question

How the ‘Earning Capacity of a business’ is assessed by Financial Statement Analysis?

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Solution

A business’s earning capacity is assessed through financial statement analysis, which analyses profitability ratios such as net profit margin, return on assets (ROA), return on equity (ROE), and earnings per share (EPS). These ratios show how efficiently a company earns profits from its income, assets, and equity.

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Chapter 10: Financial Statements Analysis - SHORT ANSWER QUESTIONS [Page 10.9]

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D. K. Goel Accountancy Volume 1 and 2 [English] Class 12 ISC
Chapter 10 Financial Statements Analysis
SHORT ANSWER QUESTIONS | Q 13. | Page 10.9
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