Question:
Which of the following tools of ‘Analysis of Financial Statements’ indicate the trend and direction of financial position and operating results?
Which of the following tools of ‘Analysis of Financial Statements’ indicate the trend and direction of financial position and operating results?
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Use comparative statements to identify trends and performance changes over time, providing insight into growth or decline.
Updated On: Jan 18, 2025
- Comparative statements
- Common size statements
- Cash flow analysis
- Ratio analysis
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The Correct Option is A
Solution and Explanation
- Comparative Statements compare financial data for multiple periods to analyze trends and directions in financial performance.
- Common size statements and ratio analysis focus on proportions and relationships, while cash flow analysis examines liquidity and cash movements.
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