In your opinion, which of the given analyses is the most beneficial one for deci
ID: 2420790 • Letter: I
Question
- In your opinion, which of the given analyses is the most beneficial one for decision-makers:
- Analysis of balance sheet
- Analysis of income statement
- Analysis of statement of cash flow
- Cite two instances where your chosen analysis stands more beneficial than the others do. Explain the instances and the importance of a financial analysis.
- In your opinion, which of the given analyses is the most beneficial one for decision-makers:
- Analysis of balance sheet
- Analysis of income statement
- Analysis of statement of cash flow
- Cite two instances where your chosen analysis stands more beneficial than the others do. Explain the instances and the importance of a financial analysis.
Explanation / Answer
In my opinion the analysis of balance sheet will be the most beneficial for a decision maker. This is so because
Because of the above, analysis of Balance Sheet is the best analysis for decision making.
But nevertheless analysis of profit and loss and cash flow statements cant be undermined and ignored
The following is the importance of analysis of financial statements :
These decisions are heavily dependent on the financial statements . Without these information , creditors and investors would have less understanding about past and current financial health of the company
2. Lending Decisions
A number of common accounting ratio like debt equity ratio and interest earned ratio are derived from financial statements and are heavily relied upon by creditors.
3. Corporate governance
Analysis of financial statements help managers to build budgets, track efficiency,understand public perception ,analyze performance and develop long and short strategies