Question

What is the purpose by using different analytical tools to measure the financial statement?

Answer 1

The investor community or the small business owners use the different analytical tools like Financial Ratios, Horizontal analysis, Vertical analysis and Trend percentage analysis, to measure / explore the financial statement of their or competitors financial statement.

The main purpose of using these different analytical tools is to evaluate the target company's financial information for the purpose of investing in the target companies.

The analytical tools examines the past and current financial statements like balance sheets, income statements and cash flow statements and expresses their opinions to the potential investors, who on their behalf forms opinions about investment in company's present and future expected performance.

Such "Financial Analysis" done also guide small-business owners to weigh the effective-ness of their business and decisions taken in that regard.

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