In which of the following thing investors(who invest their money in company shares) are interested at the time of analysis of financial statements?
Answer & explanation
Correct answer: option 3
Option 1 Earnings
Option 2 Profitability
Investors, who have invested their money in the firm’s shares, are interested about the firm’s earnings. As such, they concentrate on the analysis of the firm’s present and future profitability. They are also interested in the firm’s capital structure to ascertain its influences on firm’s earning and risk. They also evaluate the efficiency of the management and determine whether a change is needed or not. However, in some large companies, the shareholders’ interest is limited to decide whether to buy, sell or hold the shares.