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We know that the analysis of financial statement helps the analyst to know the financial information from the financial data contained in the financial statements and to assess the financial health (i.e.strength or weakness) of an enterprise.It also helps to make a forecast for the future which helps us to prepare budgets and estimates.In short, analysis of financial statements helps us to take various decisions at various places of a firm.It helps us to know the reasons for relative changes-either in profitability or in the financial position as a whole.It also help to know both the short-term liquidity position vis-a-vis working capital position; as also the long-term liquidity and solvency position of a firm.It also highlights the operating efficiency and the present profit-earning capacity of the firm as a whole.
Nithisha et al. (Sat,) studied this question.