Question

_____ is not a tool of 'Analysis of Financial Statements'.

Hint:

Distinguish between the Financial Statements (Balance Sheet, Income Statement, Cash Flow Statement, Statement of Changes in Equity, Notes) and the Tools used to analyze them (Comparative, Common-Size, Ratio Analysis, Trend Analysis, Cash Flow Analysis).

Answer 1

An Income Statement is itself a financial statement, not a tool used to analyze financial statements. The other options are all analysis techniques:

• Ratio Analysis: Calculates financial ratios to assess performance
• Comparative Statements: Compares financial data across periods
• Cash Flow Statement: While a financial statement itself, it's also used as an analytical tool

The Income Statement presents revenues and expenses, but requires other tools to properly analyze its data.