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Class 12 Accountancy - Company Accounts and Analysis of Financial Statements - Chapter Analysis of Financial Statement NCERT Solutions | State the importance of Financial Analys

Welcome to the NCERT Solutions for Class 12th Accountancy - Company Accounts and Analysis of Financial Statements - Chapter Analysis of Financial Statement. This page offers a step-by-step solution to the specific question from Excercise 1 , Question 4: state the importance of financial analysis....
Question 4

State the importance of Financial Analysis?

Answer

Financial Analysis has great importance to various accounting users on
various matters:

1. It helps in evaluating the profit earning capacity and financial feasibility of a business.

2. It helps in assessing the long-term solvency of the business.

53. Many business owners and company managers have found that insight gained from their examination of company financial statements can be invaluable. Such insight can help businesses improve their profitability, cash flow, and value.

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