What does financial statement analysis of a company help economists judge regarding economic power?
Answer & explanation
Correct answer: option 4
The correct answer is option 4- Both options 2 and 3.
The financial statement analysis of a company help economists to judge The pitfalls in financial policies and The concentration of economic power in various firms.
Through the analysis of financial statements of various firms, an economist can judge the extent of concentration of economic power and pitfalls in the financial policies pursued. The analysis also provides the basis for many governmental actions relating to licensing, controls, fixing of prices, ceiling on profits, dividend freeze, tax subsidy and other concessions to the corporate sector.