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Accountancy · 2023 · 3 marks
CBSE 2023 · Region 2 · Set 2 · Q32
'It is the process of identifying the financial strengths and weaknesses of the firm by properly establishing relationships between the various items…
'It is the process of identifying the financial strengths and weaknesses of the firm by properly establishing relationships between the various items of balance sheet and the statement of profit and loss.' Identify the process and state any two objectives of the identified process.
Marking-scheme solution
Financial Statement Analysis
Objectives of Financial Statements Analysis (Any two)
(i)
To assess the current profitability and operational efficiency of the firm as
a whole as well as its different departments so as to judge the financial
health of the firm.
(ii)
To ascertain the relative importance of different components of the
financial position of the firm.
(iii)
To identify the reasons for change in the profitability/financial position of
the firm.
(iv)
To judge the ability of the firm to repay its debt and assessing the short-
term as well as the long-term liquidity position of the firm.
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CBSE Class 12 Accountancy past-paper question from the 2023 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.