Question

What are the significant factors of financial statements? discuss the various tools of financial analysis?

Answer 1

A financial statement represents a collection of organized data because of consistent accounting procedures. The key factors presented in a financial statement are:

# Income statement
# Balance sheet
# Retained earnings
# Changes in financial position

The tools used for financial analysis are:

# Comparative financial statements – This involves the analysis of two balance sheets, income statements, and/or financial statements.

# Trend percentages – They are used to compare financial statements for various years, of which the earliest year is considered as the base year.

# Fund flow analysis – This analysis highlights the sources of working capital along with why and how it was used.

# Ratio analysis – This analysis defines a relationship between one or more than one item in income statements and balance sheets.

Answer 2

The significant factors of financial statement are various. We are discussing below.

the statement of the changes in financial position. And also the balance sheet. on the other hand, we can say that income statement and the statement of the retained earnings are all the significant factors of financial statement.

The various tools of financial analysis are given below.

1 trend percentages

 The trend percentages are percentages in which compare financial statement are used for the various of the years. And in trend percentages the earliest year is the considered as the base years respectively.

2 ratio analysis

In ratio analysis relationship are used between one or more items in balance sheets and the income statement.  

3 Comparative statement

In which financial statement we are analysis two income statement and two balance sheets and also financial statement.

4 fund flow analysis

In fund flow analysis we are highlights the working capital along with how and why.