Financial statements are very essential for analyzing the performance of the firm. Different purposes of the financial statements have been looked and the various stakeholders use these financial statements. These financial statements provide the performance of the firm as a whole entity and give the user an idea on how the firm has performed and what is expected in the future of this firm. Using these financial statements firm can also judge how much capital they can acquire using debt or equity. Thus financial statements help the firm their capital balance and also judge their capital efficiency. Different stakeholders use these ratios for their own purpose. The financial statements provide all the information required by different investors like the information about assets, liabilities, sales, net profit and the actual cash flow with the firm. Using all these components of the financial statements, all the concerned stakeholders of the firm can conclude the information about the performance of the firm, its future prospect and its debt repaying capacity (Efendi, Srivastava & Swanson, 2007).