A firm's management analyzes financial statements so that:
A) they can get feedback on their investing, financing, and working capital decisions by identifying trends in the various accounts that are reported in the financial statements.
B) they can focus on profitability, dividend, capital appreciation, and return on investment.
C) they can get more stock options.
D) Both a and b

Question

Quizplus · Accepted Answer

Management analyzes financial statements to understand the financial health of the company and make informed decisions regarding investing, financing, and working capital. This involves identifying trends in the various accounts reported in the financial statements and focusing on profitability, dividend, capital appreciation, and return on investment. Therefore, both options (A and B) are correct. Option C (getting more stock options) is not a primary reason for analyzing financial statements.

A Firm's Management Analyzes Financial Statements So That