Financial analysis - Financial analysis converts raw...

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Unformatted text preview: Financial analysis converts raw information of financial statements in useful financial information. Only after financial analysis, we can use financial statements for decision making. These financial information are useful for planning. For example, we can estimate our future ability of earning on advertising if we did financial analysis of our advertising expenses with direct return on the investment in advertising. Like this, we can do financial analysis of each and every item of profit and loss account, balance sheet and cash flow statement. For doing financial analysis, we use following tools. 1. Tool of Financial Analysis : Financial Statement Analysis In financial statement analysis is that tool of financial analysis in which we create and highlight the significant relationships of different items of financial statement. We also interpret that relationship in simple words. For example, an investor may be interested to know past earning of financial statement....
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