Question

Write 400-600 word that How does thoroughly analyzing financial information help companies make good business decisions?

Answer 1

Decision making is a process of choosing a solution where there are many alternatives exists

Financial statements are the record of all the financial transactions of the entity so it is very useful in decision making purpose as it is said to be launguage of business .

Ways it is helped in decision making

For assessing company operating performance

For making credit decision

Checking whether ideal standards are met like ideal current ratio is 2:1 debt equity 2:1

Deciding on decisions like factoring

Identifying returns on investments and making investment decisions