State the importance of Financial Analysis?


Kishore V, SME and ACW at Edumarz

  1. Shares investment and holding: The corporation is held by its shareholders, and such investments include frequent transfers and trading of shares. They may have to make judgments on whether or not to continue with the depending on a variety of criteria, including pricing, profit, and dependability. The financial statement analysis of a firm is critical for making decisions since it reflects all information that is relevant to the shareholder’s decision-making process.

2. Management, plans, and decisions: Financial statement analysis is a vital tool for every company’s decision-making, planning, and management. When preparing for a bright future and maximum earnings, the firm management takes on the task of making clever and informed decisions based on investment plans backed by data analytics.

3.Providing Credit: Shareholders provide the firm with capital in the form of loans. The decision to provide and supply such capital credit is always based on a financial study of the company’s financial statements and performance over a period of time. All capital loans have an interest rate, and selecting the optimal rate is part of the decision-making process when lending money to businesses.

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