Question

Which of the following is not a purpose of analysis of financial statements?

• A. To assess the current profitability and the operational efficiency of the firm.
• B. To ascertain the relative importance of different components of financial position of the firm.
• C. To just study the reports of the company.
• D. To judge the ability of the firm to repay its debt.

Hint:

Financial statement analysis is done to assess performance, not just to read reports.

Answer 1

The Correct Option is C

Financial statement analysis assesses a firm's financial health, examining profitability, efficiency, solvency, and liquidity. Simply reviewing these reports without drawing conclusions is counterproductive.
Therefore, option (C) is the correct answer as it does not represent a genuine objective of financial statement analysis.