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Purpose & Significance of Financial Statement Analysis, Cost Accounting Video Lecture | Cost Accounting - B Com

106 videos|173 docs|18 tests

FAQs on Purpose & Significance of Financial Statement Analysis, Cost Accounting Video Lecture - Cost Accounting - B Com

1. What is the purpose of financial statement analysis?
Ans. Financial statement analysis is used to evaluate the financial performance, stability, and profitability of a company. It helps investors, creditors, and other stakeholders in making informed decisions by analyzing financial statements such as income statements, balance sheets, and cash flow statements.
2. Why is financial statement analysis significant for businesses?
Ans. Financial statement analysis provides insight into a company's financial health and helps in assessing its ability to generate profits, manage risks, and meet financial obligations. It helps businesses identify areas of improvement, make strategic decisions, and attract investors and lenders.
3. What is the importance of cost accounting in business?
Ans. Cost accounting is crucial for businesses as it helps in determining and controlling the cost of production, improving efficiency, and making informed pricing decisions. It provides key information for budgeting, forecasting, and evaluating the profitability of products or services.
4. How does financial statement analysis benefit investors?
Ans. Financial statement analysis enables investors to assess the financial performance and stability of a company before making investment decisions. It helps in identifying trends, evaluating the company's management, assessing risk, and determining the potential return on investment.
5. What are some frequently used financial ratios in financial statement analysis?
Ans. Some commonly used financial ratios in financial statement analysis include: - Profitability ratios: such as gross profit margin, net profit margin, and return on investment. - Liquidity ratios: such as current ratio and quick ratio. - Solvency ratios: such as debt-to-equity ratio and interest coverage ratio. - Efficiency ratios: such as inventory turnover ratio and accounts receivable turnover ratio. - Market ratios: such as price-to-earnings ratio and earnings per share.
106 videos|173 docs|18 tests
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