Q.Which of the following is not a tool of financial statement analysis ?

Determining liquidity and solvency is not a function of fund flow analysis.

Fund flow analysis (a tool of Financial Statement Analysis, TN HSC Commerce) explains the movement of funds — the sources and applications of working capital between two balance-sheet dates. Its genuine functions include helping in financial planning, in the preparation of budgets, and in judging the credit worthiness of a concern.

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Standard costing is not a tool of financial statement analysis.

The tools used to analyse financial statements (Financial Statement Analysis, TN HSC Commerce) include comparative statements, common-size statements, trend analysis, ratio analysis and fund/cash flow analysis. Standard costing, on the other hand, is a technique of cost accounting used to set standards and control costs by comparing them with actuals — …

Standard costing is not a tool of financial statement analysis — option (c).

The main tools used to analyse and interpret financial statements are:

• Comparative statements — figures of two or more periods placed side by side.
• Common-size statements — each item expressed as a percentage of a common base (sales or total assets).
• Trend analysis — figures of several years expressed as an index over a base year.
• (Also ratio analysis, cash-flow and fund-flow analysis.) …

In financial-statement/fund flow analysis, 'fund' means Working Capital (current assets − current liabilities).

The term 'fund' has several meanings, but in the context of analysing the flow of resources it is used in its narrow technical sense:

• Fund = Working Capital = Current Assets − Current Liabilities.
• It is not fixed assets, current liabilities alone, or non-current assets. …