Question

All of the following are steps of a financial statement analysis except: Establish objectives of the analysis. Prepare pro forma statements. Study the industry in which the firm operates. Develop knowledge of the firm and the quality of management.

Answer 1

Answer:

In this case,the answer would be the the last option among the answer list or options given in the question or Develop knowledge of the firm and the quality of management.

Explanation:

• The steps of any financial statement analysis involve preparation of pro-forma financial statements which contain the future predictions about the financial situations or the cash flow scenario of any company or business organisation.
• Another step of the analysis is a thorough industrial analysis in the context of any company or business organisation's particular product or service.This construes a profound and detailed evaluation of the value chain of the concerned product or service manufactured and sold by the company or the organisation.
• An extremely important step of the financial statement analysis is to identify the primary objectives of such analysis and to which concerned stakeholders or entities it will impact and in what way/s.It also sets the required materials or resources needed for the analysis and predictable amount of time required to conduct the analysis.
• However,financial statement analysis does not apparently warrants any analysis of the administrative or management qualities of any company or business organisation.It only concerns those activities or operations conducted by the firm or company which eventually directly or indirectly relates to the financial operation and cash flow scenario of the firm or company.