Which of the following is NOT an objective of analysis of financial s…

The correct answer is Option (4) → To judge efficiency and eligibility of employees.

Analysis of financial statements studies the firm’s profitability, financial position and their changes. It does not deal with judging individual employees, which is a matter of personnel management.

Option (1) To assess the current profitability and operational efficiency — A true statement. Analysis shows how profitable and efficient the firm and each of its departments are, which reveals its financial health.

Option (2) To ascertain relative importance of different components of the financial position. — A true statement. Analysis shows how large each asset and liability is in relation to the others in the financial position.

Option (3) To identify the reasons for change in the profitability of the firm. — A true statement. Comparing statements of different years explains why profits have risen or fallen.