Objectives of Financial Statement Analysis
Why Analyze Financial Statements?
Different users analyze financial statements for different purposes. Investors seek profitable investments, creditors assess repayment ability, management evaluates operational performance, and regulators monitor compliance. Effective analysis provides answers to important business questions rather than merely presenting numbers.
Note
Analysis should always answer a business question rather than simply compute financial metrics.
Summary
Financial statement analysis helps stakeholders understand both current performance and future business prospects.