What is the primary goal of using financial analysis techniques such as trend analysis?

The primary goal of using financial analysis techniques such as trend analysis is to assess long-term business performance. Trend analysis involves evaluating financial data over a period of time to identify patterns, trends, and changes in the performance of a business. By analyzing historical performance data, businesses can make informed predictions about future performance, helping management to strategize and make decisions that support long-term growth and sustainability.

This approach provides valuable insights into various aspects of business functioning, including revenue growth, expense management, and profitability trends. Understanding these trends allows organizations to identify areas of strength, weaknesses, and opportunities for improvement, ultimately leading to better strategic planning.

The other options, while relevant in specific contexts, do not capture the overarching purpose of trend analysis as effectively. For example, determining short-term cash flow focuses on immediate liquidity needs rather than long-term performance. Conducting tax planning pertains to tax strategy and does not involve evaluating performance trends over time. Consolidating financial statements is a process for combining financial data from different sources, generally not the main aim of trend analysis.