Why is financial statement analysis an important area of study?
Studying financial statements can help share- and stakeholders to make more informed decisions regarding investments and loans (What is Financial Statement Analysis?). Financial statements exist to meet the needs of investors and provide accurate data on the growth and development of the company (Financial Statement Analysis, 2016).
Interpreting the given data correctly is especially important, as without correct understanding it cannot be practically applied. The data provides lending institutions, such as banks, with unbiased information regarding a business’s financial wellbeing. Financial statements also allow the upper management of the company to better perform their governing duties.
