Overview

The stakeholders of a business have to depend on financial statements to judge operating efficiency, financial condition and future prospects.

To extract information efficiently for economic decision from financial statements is both art and science. Therefore, the users should know the accounting concepts and to learn the technique to read and analyze the financial statements.

There can not be any standardized analysis and evaluation technique for all stakeholders.  A shareholder’s eyes are on profitability, dividend yield and capital gains whereas financial assistance provider would seek security, interest coverage and liquidity. The perception of one user may be entirely different from others because of varied nature and need of analysis.

The analysis and use of financial statements is not restricted to credit analysts and financial experts. Business Managers responsible for marketing, sales and inventory management can also benefit from analysis of financial statements and utilize this for their day-to-day business operating decisions.