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State the Objectives of 'Analysis of Financial Statements'. - CBSE (Arts) Class 11 - Accountancy

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State the objectives of 'Analysis of Financial Statements'.

State any one objective of financial statements analysis.

Solution 1

Objectives of Analysis Financial Statements:-

The following are the various objectives for preparing financial statements

It enables the conduct of meaningful comparisons of financial data. It provides better and easy
understanding of the changes in the financial data over time.

It helps in designing effective plans and better execution of plans by enabling control and checks over the use of the financial resources.

Analysis of Financial Statements helps to know the earning capacity and profitability of a business firm. It also measures the efficiency of the business operations.

Solution 2

Analysis of Financial Statements helps to know the profitability of the business with respect to sales and investments.

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Solution State the Objectives of 'Analysis of Financial Statements'. Concept: Concept of Financial Statements.
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