Question : Choose which of the following statements is true.
Option 1: Determining operating efficiency and profitability is not an objective of financial analysis.
Option 2: Financial analysis is used for credit analysis.
Option 3: Financial Statement analysis does not ignore qualitative elements.
Option 4: None of the above
Correct Answer: Financial analysis is used for credit analysis.
Solution : Answer = Financial analysis is used for credit analysis.
1. The objective of financial statement analysis is to determine operating efficiency and profitability.
2. It is used for credit analysis.
3. Since quality cannot be quantified in monetary terms, financial statement analysis ignores qualitative factors in favour of focusing primarily on financial issues.
Hence, the correct answer is 2.
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