Financial statement analysis is the process of obtaining information and understanding of the entity through its reported financial statements.

Financial statement analysis consists of

• Trend Analysis
• Ratio Analysis

Ratio analysis means computing relevant accounting ratios which may include asset turnover ratio, liquidity ratios and profitability ratios.

Trend analysis means comparing reported financial statements figures of one period with the comparative periods to know the differences. e g drop in sales by 13% due to market slump, increase by 15% in expense due to high inflation rates