Hello Mayuresh,

That is an excellent question (#1) and a complete answer would take a very long time to compose. The basic answer is that there are both qualitative and quantitative ways of evaluating the performance of businesses. Accounting is the quantitative grammar that allows the language of business performance evaluation to be communicated to analysts. If you don't speak and understand accounting then you cannot speak and understand the quantitative language of business.

In answer to your second question, it is important to understand both of the major aspects of accounting: preparation of statements, and analysis. Many analysts focus predominately on the analysis of statements. Unfortunately, when you understand how accounting statements are prepared then you also know the possible abuses that preparers can engage in. It takes a long time to get comfortable speaking the language of accounting, just as it takes awhile to speak any language.

Yours, in service,

Jason