Page 3 - LN FSA

• Dividend Analysis : It helps in determining the rate of dividend.

• General Business Analysis : It helps in determining the profit
potential of the firm.

Tools or techniques of financial statements analysis :

• Comparative statements - mean a comparative study of

individual items or components of financial statements i.e. Balance

sheet and statements of profit and loss of two or more years of the
enterprise itself.

• Common- Size statements - means statements in which

individual items of financial statements in which individual items of
financial statements of two or more year are placed side by side and

there after converted into percentage taking a common base.

• Ratio Analysis - is an arithmetic expression of relationship
between two related or interdependent components of financial

statements of an accounting period.
• Cash flow statements - statements showing flow of cash and cash

equivalents during the accounting period classified as operating

activity, investing activity and financing activities.