Uses of Financial Statement Analysis

Q. Describe briefly the uses of Financial Statement Analysis.

Analysis of the statement of financial position referred to as a balance sheet analysis, reports on a company’s assets, liabilities, and ownership equity at a given point in time.

1. A financial statement analysis provides information on the operation of the enterprise. These include sale and the various expenses incurred during the processing state.

2. Financial statement analysis gives information about the changes in equity which helps to explain the changes of the company’s equity throughout the reporting period.

3. Financial statement analysis provides information about cash flows which helps to prepare report on company’s cash flow activities, particularly it operating, investing and financial activities.