Financial performance analysis: Critical analysis on the use of financial statements in assessing the performance of an organisation

Financeis considered to be the life blood of every business organization. No business enterprise can exist without finance. The owners always eager to know the financial position of the Financial statement i.e. profit and loss account and balance sheet. Finance is one of the most important aspects of business management and includes decision related to the use and acquisition of funds for the enterprise. Finance is a branch of economics considered with providing funds to individuals, business governments. Business enterprises in developing economics are conceived as instruments of economic progress and social change and are expected to reach the commanding heights of economy. Financial statement analysis (or financial analysis) is the process of reviewing and analyzing a company's financial statements to make better economic decisions to earn income in future. These statements include the income statement, balance sheet, statement of cash flows, notes to accounts and a statement of changes in equity (if applicable). Financial statement analysis is a method or process involving specific techniques for evaluating risks, performance, financial health, and future prospects of an organization.