We can distribute correlations between various parts of the financial statement.
Every financial transaction does not connect with other financial transactions, but a few transactions are connected with others so that you can plan accordingly.
We often have to find out how incurring one expense affected the other’s expenses or income or asset or liability.
When we can find out how everything is related, we can create various clusters of heads.
Let’s learn by example.
Personal Loan is a Liability. Interest on a personal loan is an Expense
So you can say that Personal Loan has correlated interest expense.
In case you can reduce the personal loan, you can reduce interest.