INA Ltd is a company that deals in manufacturing of pharmaceutical products. Raman has recently been hired as an assistant to the accountant of INA Ltd. The accountant of the firm Mr. Rajat asks Raman to go for financial statement analysis of the firm to assess the financial position of the firm. To judge the knowledge and capabilities of Raman, Mr. Rajat asked him to analyze the financial statements from the viewpoint of various parties interested in the firm eg. the management, the lenders, the investors, labour unions, government, etc.

Which of the following statements will primarily be utilized by Raman for the purpose of financial statement analysis?

Balance sheet and statement of profit and loss. Balance sheet and cash flow statement. Cash flow statement and fund flow statement. Statement of profit and loss and cash flow statement.

Balance sheet and statement of profit and loss.

The financial statements (Income Statement and Balance Sheet) of companies. Basically, these are summarised financial reports which provide the operating results and financial position of companies, and the detailed information contained therein is useful for assessing the operational efficiency and financial soundness of a company. This requires proper analysis and interpretation of such information for which a number of techniques (tools) have been developed by financial experts.