What do you understand by analysis and interpretation of financial statements? Discuss its importance.
Answers
Answer:
The analysis and interpretation of financial statement are an attempt to determine the significance and meaning of significance statement data so that a forecast may be made of the prospect for future earning,both current as well as long term
Explanation:
“Analysis and interpretation of financial” statements is an attempt to determine the importance and meaning of financial statement data so that future earnings, capacity to pay interest, debt maturity, both current and future prospects can be predicted.
The main task of financial analysis is the strength and weaknesses of a business venture by comparing different components and examining their contents, by restructuring and analyzing the data contained in financial statements. “Analysis and interpretation of financial” statements represent the last of the four major phases of accounting.