2025, Vol. 6, Special Issue 3

Financial statement analysis is a crucial process that enables stakeholders to evaluate a company’s financial condition, operational performance, and long-term viability. It serves as a fundamental tool for investors, creditors, management, and regulatory bodies to make informed economic decisions. The core objective of this research is to explore various techniques of financial statement analysis, such as ratio analysis, trend analysis, and common-size statements, and demonstrate their effectiveness in real-world financial evaluation.

Financial statements, including the balance sheet, income statement, and cash flow statement, provide the foundation for such analysis. This study investigates how data extracted from these documents can be systematically analyzed to derive meaningful insights into a firm’s liquidity, profitability, solvency, and operational efficiency. By applying these analytical tools to companies like Reliance Industries and Infosys, this paper demonstrates how stakeholders can interpret financial ratios and trends over time to assess corporate stability and performance.

The study also addresses the significance of using financial analysis in decision-making, such as investment selection, credit approval, and internal business strategy. While financial analysis offers valuable quantitative insight, it also has limitations, such as dependence on historical data and the risk of manipulated accounting practices. Despite these challenges, financial statement analysis remains one of the most reliable instruments in evaluating a company’s financial health.