Please answer the following question: "Your grandmother
sends you a large check for your birthday, asking that you
use the money to buy shares of stock in a company. She
recommends that you review the company's financial
statements before investing. What can a company's financial
statements tell you about the investment potential of its
stock?"
Answer Posted / rohitash sharma
Generally financial statement reflects the financial
condition of the firm in terms of profit growth and
sales.There are different type of financial ratio which can
be calculated after seing the financial statement like Eps
(earning per share),Return on capital employed,working
capita ratio & acid test ratio.these ratios will give
adequate information related to liquidity position of
enterprise apart from that we should also analyse credit
policies of the enterprise by using account receivable
cycle & account payble cycle.
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