State the significance of analysis of financial statements to the creditors.
Dear student,
The following are the advantages of the Financial analysis to the creditors -
- It enables the conduct of meaningful comparisons of financial data. It provides better and easy understanding of the changes in the financial data overtime.
- It helps in designing effective plans and better execution of plans by enabling control and checks over the use of the financial resources.
- Analysis of Financial Statements helps to know the earning capacity and profitability of a business firm. It also measures the efficiency of the business operations.