what are the benefits of analysis and interpretation of financial data

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Expert Solution

Analysis is a process of dividing or splitting the information into many parts to get a meaningful statement or data .

Interpretation means explaining the scope and significance of the statements which are obtained .

Analysis and interpretation of financial data :

Objectives :
1. To examine the earning capacity and efficiency of various business activities with the help of income statements.

2. To measure the managerial efficiency under various business situations.

3. To estimate the performance evaluation of different departments over a period of time.

4. To measure short term and long term solvency position of the business organization with the help of Balance Sheet.

5. To examine the source of finance and way of utilizing the available finance.

6. To determine earning capacity and future prospects of the business concern.

7. To identify the way of utilizing fixed assets and the role of fixed assets on maintaining the earning capacity of the business concern.

8. To investigate the future potential of the business concern.

9. To compare operational efficiency of similar concerns engaged in the same industry.

10. To identify the growth trend of the business organization.

jeff jeffy answered 1 year ago

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