Explain about financial analysis, Strategic Management

Q. Explain about Financial analysis?

The objective of financial statements is to provide information to all users of accounts to help them for decision-making. Note that most users will only have access to published financial statements.

The use of ratios

To compare results over a period of time
To measure performance against other organisations
To compare results with a target
To compare against industry averages

Ratios can be grouped into 3 main areas

Performance - how well the business has done (profitability)
Position - short term standing of the business (liquidity)
Potential - what the future holds for the business

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