Question

Why is financial statement analysis crucial in corporate planning and financial management?

a.

To exhibit the financial position at the beginning of the financial year.

b.

To analyze the company's position in terms of growth, profitability, liquidity, and solvency.

c.

To provide accounting data of opening balances of assets and liabilities.

d.

To understand inter-company and intracompany comparisons for tax purposes.

Answer: (b).To analyze the company's position in terms of growth, profitability, liquidity, and solvency. Explanation:Financial statement analysis is crucial for understanding various aspects of a company's position, including growth, profitability, liquidity, and solvency. It goes beyond presenting accounting data to provide insights for corporate planning and financial management.

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Q. Why is financial statement analysis crucial in corporate planning and financial management?

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