Financial Statement Analysis and Methods of Financial Statement Analysis.
Financial statement are written reports of financial affairs of a company which report and communicate the result of its business operations for a particular period of time and its financial position at the end of that period. Financial statement are the means of communicating financial information to the users of such information. It is equally important to the management, shareholders, creditors, suppliers, employee, customers, tax authorities, financial researchers, etc to provide useful financial information for financial forecasting.
Financial statement analysis can be performed by employing a number of methods or techniques. There are various method which are described in this note. The various methods are Ratio analysis, Cash flow analysis, Comparative financial statement and Trend analysis. This note also describes about the importance or advantages and limitations of financial statement analysis. There are also different parties who are in need of financial statement analysis for making different decisions and financial statement analysis helps these parties. The parties are: Shareholders, Investors and lenders, Creditors, Management and Government.