Can You Discuss On The Financial Statements Which Are Used In The Analysis Process.

Analysis of Financial Statements:
Analysis of financial statement is one of the most common techniques of financial analysis, in which the financial performance and financial health of a company are analyzed based on its past performance.

The following financial statements are used in the analysis process.

1. Profit & Loss Statement or Income Statement
Income statement reflects the operating efficiency or profitability of a company as a result of its operations along with the net profit available to the shareholders for a given year (usually one accounting period). This statement provides the analyst with some insight into the financial performance of the company.
2. Balance Sheet
Balance Sheet is a snap-shot of an organization's financial health at a exacting time. It shows what assets are owned by the business and the sources of acquiring these assets.
3. Statement of Shareholders' equity
Statement of shareholders' equity provides the share of the owners in the business.
4. Statement of Cash Flows
Statement of cash flows explicitly reflects the cash movement (inflows and outflows) during the operations in an accounting period.
Taken together, these statements give an accounting picture of the firm's operations and financial position. Financial statements report what has actually happened to the assets, earnings, and dividends over the years. The analysis of the information contained in these statements help management of the organization to evaluate the performance and activities of the concern.

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