BUISENESS MANAGEMENT
FINANCIAL MANAGEMENT
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Ignores price level changes
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Measures the efficiency of business
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Lacks qualitative analysis
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Is effected by personal bias
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Detailed explanation-1: -Financial analysis is significant because it facilitates intra firm comparison. Explanation: Intra-firm comparison is a strength of the financial statement since it allows you to compare the company’s financial status not only to previous years, but also to competitors’.
Detailed explanation-2: -The goal of financial analysis is to analyze whether an entity is stable, solvent, liquid, or profitable enough to warrant a monetary investment. It is used to evaluate economic trends, set financial policy, build long-term plans for business activity, and identify projects or companies for investment.
Detailed explanation-3: -Financial Planning and Analysis (FP&A) teams play a crucial role in companies by performing budgeting, forecasting, and analysis that support major corporate decisions of the CFO, CEO, and the Board of Directors.
Detailed explanation-4: -Performing a financial analysis involves evaluating projects, budgets, and other finance-related entities within a business or asset. It allows you to understand and examine the business’s performance and make strategic decisions about your company’s future growth and opportunities.
Detailed explanation-5: -Financial statements provide a snapshot of a corporation’s financial health, giving insight into its performance, operations, and cash flow. Financial statements are essential since they provide information about a company’s revenue, expenses, profitability, and debt.