Financial Ratios and Financial Statement Analysis

The analysis of financial statement is a process of evaluating the relationship between component parts of financial statements to obtain a better understanding of the position and performance of a firm. The first task of the financial analyst is to select the relevant information from the total information contained in the financial statements. The second step is to arrange the information in a way to highlight significant relationships. The final step is the interpretation and drawing of inferences and conclusions. In brief, financial analysis is the process of selection, relation, and evaluation. Keeping all this in view, this book - based on the research of expert scholars in India - is devoted to an in-depth analysis of financial statements and its use for decision-making by various parties. The focus of the book is on ratio analysis, which is the most widely-used technique of financial statement analysis.