Commerce Exam > Commerce Questions > Shareholders are interested in the analysis o...
Start Learning for Free
Shareholders are interested in the analysis of financial statement because….
- a)They want to judge the present and future earning capacity of the business.
- b)For Research
- c)For the assessment of tax
- d)For the payment to the financial institutions
Correct answer is option 'A'. Can you explain this answer?
| FREE This question is part of | Download PDF Attempt this Test |
Verified Answer
Shareholders are interested in the analysis of financial statement bec...
Shareholders are interested in the analysis of financial statement because they want to judge the present and future earning capacity of the business.
Most Upvoted Answer
Shareholders are interested in the analysis of financial statement bec...
It provides them with valuable information about the financial health and performance of a company. By analyzing the financial statements, shareholders can assess the company's profitability, liquidity, solvency, and overall financial stability.
Here are a few reasons why shareholders are interested in the analysis of financial statements:
1. Investment decision-making: Shareholders use financial statement analysis to make informed decisions about buying, holding, or selling their shares in a company. They can evaluate the company's past performance, growth potential, and risk levels to determine if it aligns with their investment goals.
2. Dividend payouts: Shareholders are interested in the analysis of financial statements to assess a company's ability to generate profits and distribute dividends. They want to ensure that the company has sufficient earnings to sustain regular dividend payments.
3. Assessing management effectiveness: Financial statement analysis helps shareholders evaluate the effectiveness of a company's management team. They can analyze key financial ratios, such as return on equity, return on assets, and profit margins, to gauge how well management is utilizing the company's resources and generating profits.
4. Risk assessment: Shareholders use financial statement analysis to identify potential risks and uncertainties that could impact the company's future performance. By assessing factors like debt levels, liquidity ratios, and cash flow trends, shareholders can gauge the company's ability to weather economic downturns or industry-specific challenges.
5. Transparency and accountability: Shareholders rely on financial statements to ensure transparency and accountability from the company's management. By analyzing financial reports, shareholders can detect any potential accounting irregularities, fraudulent activities, or mismanagement, which can help protect their investments.
In summary, shareholders are interested in the analysis of financial statements because it provides them with insights into a company's financial performance, helps them make investment decisions, assesses management effectiveness, identifies risks, and ensures transparency and accountability.
Here are a few reasons why shareholders are interested in the analysis of financial statements:
1. Investment decision-making: Shareholders use financial statement analysis to make informed decisions about buying, holding, or selling their shares in a company. They can evaluate the company's past performance, growth potential, and risk levels to determine if it aligns with their investment goals.
2. Dividend payouts: Shareholders are interested in the analysis of financial statements to assess a company's ability to generate profits and distribute dividends. They want to ensure that the company has sufficient earnings to sustain regular dividend payments.
3. Assessing management effectiveness: Financial statement analysis helps shareholders evaluate the effectiveness of a company's management team. They can analyze key financial ratios, such as return on equity, return on assets, and profit margins, to gauge how well management is utilizing the company's resources and generating profits.
4. Risk assessment: Shareholders use financial statement analysis to identify potential risks and uncertainties that could impact the company's future performance. By assessing factors like debt levels, liquidity ratios, and cash flow trends, shareholders can gauge the company's ability to weather economic downturns or industry-specific challenges.
5. Transparency and accountability: Shareholders rely on financial statements to ensure transparency and accountability from the company's management. By analyzing financial reports, shareholders can detect any potential accounting irregularities, fraudulent activities, or mismanagement, which can help protect their investments.
In summary, shareholders are interested in the analysis of financial statements because it provides them with insights into a company's financial performance, helps them make investment decisions, assesses management effectiveness, identifies risks, and ensures transparency and accountability.
Attention Commerce Students!
To make sure you are not studying endlessly, EduRev has designed Commerce study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in Commerce.
|
Explore Courses for Commerce exam
|
|
Similar Commerce Doubts
Top Courses for CommerceView all
Shareholders are interested in the analysis of financial statement because….a)They want to judge the present and future earning capacity of the business.b)For Researchc)For the assessment of taxd)For the payment to the financial institutionsCorrect answer is option 'A'. Can you explain this answer?
Question Description
Shareholders are interested in the analysis of financial statement because….a)They want to judge the present and future earning capacity of the business.b)For Researchc)For the assessment of taxd)For the payment to the financial institutionsCorrect answer is option 'A'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Shareholders are interested in the analysis of financial statement because….a)They want to judge the present and future earning capacity of the business.b)For Researchc)For the assessment of taxd)For the payment to the financial institutionsCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Shareholders are interested in the analysis of financial statement because….a)They want to judge the present and future earning capacity of the business.b)For Researchc)For the assessment of taxd)For the payment to the financial institutionsCorrect answer is option 'A'. Can you explain this answer?.
Shareholders are interested in the analysis of financial statement because….a)They want to judge the present and future earning capacity of the business.b)For Researchc)For the assessment of taxd)For the payment to the financial institutionsCorrect answer is option 'A'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Shareholders are interested in the analysis of financial statement because….a)They want to judge the present and future earning capacity of the business.b)For Researchc)For the assessment of taxd)For the payment to the financial institutionsCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Shareholders are interested in the analysis of financial statement because….a)They want to judge the present and future earning capacity of the business.b)For Researchc)For the assessment of taxd)For the payment to the financial institutionsCorrect answer is option 'A'. Can you explain this answer?.
Solutions for Shareholders are interested in the analysis of financial statement because….a)They want to judge the present and future earning capacity of the business.b)For Researchc)For the assessment of taxd)For the payment to the financial institutionsCorrect answer is option 'A'. Can you explain this answer? in English & in Hindi are available as part of our courses for Commerce.
Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free.
Here you can find the meaning of Shareholders are interested in the analysis of financial statement because….a)They want to judge the present and future earning capacity of the business.b)For Researchc)For the assessment of taxd)For the payment to the financial institutionsCorrect answer is option 'A'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
Shareholders are interested in the analysis of financial statement because….a)They want to judge the present and future earning capacity of the business.b)For Researchc)For the assessment of taxd)For the payment to the financial institutionsCorrect answer is option 'A'. Can you explain this answer?, a detailed solution for Shareholders are interested in the analysis of financial statement because….a)They want to judge the present and future earning capacity of the business.b)For Researchc)For the assessment of taxd)For the payment to the financial institutionsCorrect answer is option 'A'. Can you explain this answer? has been provided alongside types of Shareholders are interested in the analysis of financial statement because….a)They want to judge the present and future earning capacity of the business.b)For Researchc)For the assessment of taxd)For the payment to the financial institutionsCorrect answer is option 'A'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Shareholders are interested in the analysis of financial statement because….a)They want to judge the present and future earning capacity of the business.b)For Researchc)For the assessment of taxd)For the payment to the financial institutionsCorrect answer is option 'A'. Can you explain this answer? tests, examples and also practice Commerce tests.
|
|
Explore Courses for Commerce exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup