What is the nature of financial analysis if it is done by different analysts?
Answer & explanation
Correct answer: option 2
Financial analysis is the process of identifying the financial strengths and
weaknesses of the firm by properly establishing relationships between the various
items of the balance sheet and the statement of profit and loss. Financial analysis
can be undertaken by management of the firm, or by parties outside the firm,
viz., owners, trade creditors, lenders, investors, labour unions, analysts and
others. The nature of analysis will differ depending on the purpose of the analyst.