Financial statement analysis involves establishing relationships between balance sheet and income statement items to identify a firm's financial strengths and weaknesses. This allows for more effective decision making by understanding the company's financial health. The document analyzes financial ratios over the last 5 years for Tata Teleservices Ltd to assess its profitability, liquidity, solvency, and overall financial position. It finds that while revenue is growing, current ratios are low and inconsistent, indicating weak liquidity. Gross profit ratios also fluctuate, showing uneven profit performance.