Asked Nov 26, 2019

What is analysis of financial statements?


Expert Answer

Explain the  meaning of financial statement analysis:

Financial statements: Financial statements are condensed summary of transactions communicated in the form of reports for the purpose of decision making. There are four types of financial statements. They are,

  1. Balance sheet
  2. Income statement
  3. Statement of cash flows
  4. Statement of retained earnings

Financial Statement Analysis:

The financial statement analysis is the process of analyzing the financial statements of a company to evaluate its profitability and financial performance.

Main ways to analyze financial statements are,

  • Horizontal analysis: The comparison of an item of a financial statement of one year against the same it...

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