State the meaning of Analysis and Interpretation.
Analysis and Interpretation refers to a systematic and critical examination of
the financial statements. It not only establishes cause and e Tect relationship
among the various items of the financial statements but also presents the
financial data in a proper manner. The main purpose of Analysis and
Interpretation is to present the financial data in such a manner that is easily
understandable and self-explanatory. This not only helps the accounting users to
assess the fi nancial performance of the business over a period of time but also
enables them in decision making and policy and financial designing process.
How will you disclose the following items in the Balance Sheet of a company;
(i) Loose tools
(ii) Uncalled liability on partly paid-up shares
(iii) Debentures redemption reserve
(iv) Mastheads and publishing titles (v) 10% debentures
(vi) Proposed dividend
(vii) Share forfeited account
(viii) Capital redemtion reserve
(ix) Mining rights
(x) Work-in-progress
The current ratio provides a better measure of overall liquidity only when a
firm’s inventory cannot easily be converted into cash. If inventory is liquid, the
quick ratio is a preferred measure of overall liquidity. Explain.
Explain the usefulness of trend percentages in interpretation of financial performance of a company.
The liquidity of a business firm is measured by its ability to satisfy itslong-
term obligations as they become due. What are the ratios used forthis purpose?
What relationships will be established to study?
(a) Inventory Turnover (b) Debtor Turnover
(c) Payables Turnover (d) Working Capital Turnover
What do you understand by analysis and interpretation of financial statements? Discuss its importance.
State the importance of financial statements to
(i) shareholders
(ii) creditors
(iii) government
(iv) investors
Describe the different techniques of financial analysis and explain the limitations of financial analysis.
What are liquidity ratios? Discuss the importance of current and liquid ratio.
What is the importance of comparative statements? Illustrate youranswer with particular reference to comparative income statement.
Describe the different techniques of financial analysis and explain the limitations of financial analysis.
State the meaning of financial statement analysis?
‘Financial statements reflect a combination of recorded facts, accounting
conventions and personal judgements’ discuss.
What are various types of ratios?
Prepare the format of balance sheet and explain the various elements of balance sheet.
State the importance of Financial Analysis?
How would you study the Solvency position of the firm?
How will you disclose the following items in the Balance Sheet of a company;
(i) Loose tools
(ii) Uncalled liability on partly paid-up shares
(iii) Debentures redemption reserve
(iv) Mastheads and publishing titles (v) 10% debentures
(vi) Proposed dividend
(vii) Share forfeited account
(viii) Capital redemtion reserve
(ix) Mining rights
(x) Work-in-progress
What are liquidity ratios? Discuss the importance of current and liquid ratio.
What do you mean by Ratio Analysis?