Practicing Success
Practicing Success
CUET Preparation Today
| 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. |
| If Raman is to analyse the financial statements for the top management, what should he consider? |
Short-term liquidity of the firm. Ability to pay its long-term lenders. To see that the resources of the firm are
used most efficiently and that the firm's
financial condition is sound. None of the above |
| To see that the resources of the firm are used most efficiently and that the firm's financial condition is sound. |
| The process of critical evaluation of the financial information contained in the financial statements in order to understand and make decisions regarding the operations of the firm is called ‘Financial Statement Analysis’. It is basically a study of relationship among various financial facts and figures as given in a set of financial statements, and the interpretation thereof to gain an insight into the profitability and operational efficiency of the firm to assess its financial health and future prospects. |
