Financial statement analysis can make a big difference in management of your finance.

This will assist in ascertaining the following.

• The liquidity strength – Cashflow factor
• Worth of business.
• Predict future cash flow.
• Detect inefficiency
• Remove toxic asset
• Need for reassessment of business.
• Set other non financial factor that add value
• Looks at holistic analysis of business.
• Interpret the financial statement
• See the relationship between the income statement and the balance sheet.

Two statement used in financial analysis

a. Income statement(profit and loss account).

b. Balance Sheet (statement of financial position).

Ratios used in determining the strength of business.

1.Liquidity ratio= cash/short term debt

2. Return on capital=net profit after tax/capital employed others

SEE MORE

1.ACCOUNTING SOFTWARE

2.FREE TAX SOFTWARE

Disclaimer: This article if for the purpose of information. We disclaim all liability arising from reliance in this article