Question
(The subject is Financial Statement Analysis)

1 1 1 1 1 2. Explain why it is so important for analysts to understand a companys strategy when analysing financial statemen
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Answer #1

Strategy of a company explain the function of firm for long term. The working of company depend on the strategy. A company's also make financial strategy to maximize shareholder wealth. It looks as the future financial performance of company depend on the strategy only. The purpose financial statement analysis is to forecast about the financial performance of company, which may vary from stakeholder to stakeholder. The stakeholder of a business may be internal or external . Some internal stakeholders are owner, employee, supplier and some external stakeholders are government , competitors , analyst etc.

The strategy in financial statements analysis evaluate the forecasted performance of company which creates ,

  • Financial Transparency
  • Minimize error
  • Build truth
  • Improved financial forecast
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