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Financial Statement Analysis Based On Materials Used

Financial Statement Analysis Based on Material Used:

Based on the material used, financial statement analysis may be classified into two major types such as External analysis and internal analysis.

A. External Analysis:

Outsiders of the business concern do normally external analyses but they are indirectly involved in the business concern such as investors, creditors, government organizations and other credit agencies. External analysis is very much useful to understand the financial and operational position of the business concern. External analysis mainly depends on the published financial statement of the concern. This analysis provides only limited information about the business concern.

Financial Statement Analysis Based On Materials Used
[Post Image Courtesy of EmptyGlass at FreeDigitalPhotos.net]

B. Internal Analysis:

The company itself does disclose some of the valuable information to the business concern in this type of analysis. This analysis is used to understand the operational performances of each and every department and unit of the business concern. Internal analysis helps to take decisions regarding achieving the goals of the business concern.

About Author Mohamed Abu 'l-Gharaniq

when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries.

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