Financial statement analysis involves the application of analytical tools and techniques to the financial data to get information that is useful in decision-making.
Foundation of any good analysis is a thorough understanding of the objectives to be achieved and the uses to which it is going to be put. Such understanding leads to an economy of effort as well as to a useful and most relevant focus on the points that need to be clarified and the estimates and projections that are required.
Financial statement analysis is oriented towards the achievement of definite objectives. There are three types of users to whom the financial statement analysis could be very useful. They are - short-term lenders, long-term lenders and finally, stockholders.