CHAPTER 2
Analysis of Financial Statements
The Goals of Financial Analysis
Now we know that a typical Income Statement and Balance Sheet looks like this:
Figure 20
Exactly what can we hope to accomplish by analyzing the financial aspects of a firm?
With the help of financial analysis, we can take investment and management decisions. Sometimes, answers will not be very clear. But we will get a lot of red flags. Both insiders and outsiders have a common goal of attempting to identify the strengths and weaknesses of the firm. While external stakeholders can also conduct a similar financial analysis, the exercise will be more robust for managers, ...
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