The analysis of financial figures contained in the company's profit and loss account and balance sheet by employing appropriate technique is known a financial statement analysis. Financial statement analysis is useful to different parties to obtain the required information about the organization. Following are the parties interested in financial statement analysis.
1. Shareholders
Shareholders are interested in financial statement analysis to know the profitability of the organization. Profitability shows the growth potentiality of an organization and safety of investment of shareholders.
2. Investors And Lenders
Investors and lenders are interested to know the solvency position of an organization. They analyze the financial statement position to know about the safety of their investment and ability to pay interest and repayment of principle amount on due date.
3. Creditors
Creditors are interested in analyzing the financial statements in order to know the short term liquidity position of an organization. Creditors analyse the financial statement to know either the organization is enable to pay the amount of short term liabilities on due date.
4. Management
Management is interested to analyze the financial statement for measuring the effectiveness of its policies and decisions.It analyze the financial statements to know short term and long term solvency position,profitability,liquidity position and return on investment from the business.
5.Government
Government is interested to analyze the financial position in determining the amount of tax liability. It also helps for formulating effective plans and policies for economic growth.
1. Shareholders
Shareholders are interested in financial statement analysis to know the profitability of the organization. Profitability shows the growth potentiality of an organization and safety of investment of shareholders.
2. Investors And Lenders
Investors and lenders are interested to know the solvency position of an organization. They analyze the financial statement position to know about the safety of their investment and ability to pay interest and repayment of principle amount on due date.
3. Creditors
Creditors are interested in analyzing the financial statements in order to know the short term liquidity position of an organization. Creditors analyse the financial statement to know either the organization is enable to pay the amount of short term liabilities on due date.
4. Management
Management is interested to analyze the financial statement for measuring the effectiveness of its policies and decisions.It analyze the financial statements to know short term and long term solvency position,profitability,liquidity position and return on investment from the business.
5.Government
Government is interested to analyze the financial position in determining the amount of tax liability. It also helps for formulating effective plans and policies for economic growth.