Financial Analysis has great importance to various accounting US’ on various matters. Income Statements, Balance Sheets and other financ data that provides information about expenses and sources of income, profi loss and also helps in assessing the financial position of a business. The financial data are not useful until they are analysed. There are various tools a methods such as Ratio Analysis, Cash Flow Statements that make the financ data to cater varying needs of various accounting users.
The following are the reasons that advocate in favour of Financial Analys
(i) It helps in evaluating the profit earning capacity and financ feasibility of a business.
(ii) It helps in assessing the long-term solvency of the business.
(iii) It helps in evaluating the relative financial status of a firm comparison to other competitive firms.
(iv) It assists management in decision making process, plans and also in establishing an effective controlling
