Analysis of Financial Statement

Questions Bank

  • Section 2(40) states the set of financial statements which are (i) Balance Sheet, (ii) Statement of Profit and Loss, (iii) Cash Flow Statement, (iv) Statement of Change in Equity, (v) Notes to Accounts.
    2018-02-12 16:03:42
  • Financial Statement analysis is the process of critical evaluation of financial information contained in the financial statement in order to understand and make decision.
    2018-02-12 15:55:54
  • Objective of Financial Statement Analysis are (i) To Judge Financial Stability, (ii) To measure short-term and long-term solvency. (iii) Operating Efficiency, (iv) Assess the Future Prospects.
    2018-02-12 15:55:37
  • Types of Financial Statement Analysis are (i) From User Point of View, (ii) From Objective Point of View, (iii) From Time Span Point of View.
    2018-02-12 15:55:09
  • Process of Financial Statement Analysis are (i) Re-Arrangement of Data, (ii) Comparison, (iii) Analysis, (iv) Interpretation.
    2018-02-12 15:54:39
  • Tools of  Financial Statement Analysis are (i) Comparative Financial Statement, (ii) Common Size Statement, (iii) Ratio Anaysis, (iv) Cash Flow Statement
    2018-02-12 15:54:13
  • Limitation of Financial Statement Analysis are (i) Window Dressing, (ii) Use of Diverse Procedure, (iii) Qualitative Aspect Ignored, (iv) Historical, (v) Price Level Change, (vi) Not Free from Bias.
    2018-02-12 15:53:42
  • Advantage of Financial Statement Analysis are (i) Security Analysis, (ii) Credit Analysis, (iii) Debt Analysis, (iv) Dividend Decision, (v) Business Analysis.
    2018-02-12 15:53:02
  • Parties Interested in Financial Statement Analysis are (i) Finance Manager, (ii) Management, (iii) Trade Creditors, (iv) Banker and Lenders, (v) Investors, (vi) Labour Union, (vii) Government, (viii) Regulatory Authorities.
    2018-02-12 15:50:28

  • 2018-02-12 15:49:39

Questions Bank -

Ans. Comparative financial statements are the financial statements based on the comparative relationship among the components of financial statements.

Ans. To identify magnitude and direction of changes in absolute and percentage figures.

Ans. It means an income statement which shows the operating for a number of years together with changes in absolute values as well as in percentages.

Ans. Comparative Balance Sheet means a Balance Sheet which shows the financial position for years together with changes both in absolute values and in percentages.

Ans. To ascertain the relative importance of different components of the financial statement.

Ans. Common Size Balance Sheet states the balance sheet in which figures reported in balance sheet are converted into percentages to total assets.

Ans. Ratio Analysis is a process of determining the presenting the numerical relationship of items and group of items in the financial statements.

Ans. To understand financial affairs of an enterprise in a better manner.

Ans. The two advantage of ratio analysis are
(i)    Inter-firm comparison
(ii)    Forecasting.

Ans. The item having cent percent while preparing assets side of Common Size Statement of Profit and Loss is 'Revenue From Operations'.

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