Question

Why does the management of any companies analyze financial statements? Explain by using the different tools...

Why does the management of any companies analyze financial statements? Explain by using the different tools in analyzing financial statement with proper numerical example.

Thank you in advance for not copying other's answers. Please don't forget the proper numerical example.

Business   Accounting   
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Answer #1

Let us Assume A Limited is a company & having two years Income Statement Below:

Particulars

2020

2019

Revenue

100000

80000

Less: Operating Costs

50000

45000

Less: Non-Operating Costs

5000

6500

Net Income Before Tax

45000

28500

Less: Tax

9000

5700

Net Income After Tax

36000

22800

As we can see from the Income Statement Profit is increased in 2020 as Sales is Increased as compared to 2019 So for every company to analyze profits & to see how company is working has to see & analyze the financial statements.

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