3: Financial Reporting and Analysis

Question 1

Liquidity

Answer 1

the Ability to meet short-term obligations. Higher positive cash flow increases the likelihood of being able to repay these obligations

Question 2

Solvency

Answer 2

The ability to meet long-term obligations

Question 3

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Complete Set of Financial Statements

Answer 3

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Question 4

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Balance Sheet

Answer 4

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aka Statement of Financial Position/Condition

presents a company’s current financial position by disclos- ing the resources the company controls (assets) and its obligations to lenders and other creditors (liabilities) at a specific point in time

Assets = Liabilities + Owners Equity

Question 5

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Current Assets

Answer 5

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those that are cash/equivalents, are held of trading; or are expected to be converted to cash (realized), sold, or consumed within 12 months or the ocmpani’es normal operating cycle.

All other assets are non-current assets

Question 6

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Current Liabilities

Answer 6

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those that are expected to be settled within 12 months or in teh company’s normal operating cycle, all others are considered non-current

Question 7

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IFRS

Answer 7

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International Financial Reporting Standards, Int’l version of US GAAP.

Require current vs non-current itemized balance sheets

Question 8

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Statement of Comprehensive Income

Answer 8

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Under IFRS, can be Stmt of Comprehensive Income or Income Statement and Comprehensive Income

Question 9

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Net Income

Answer 9

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aka “The Bottom Line” of the income statement

aka Net Earnings, Net Profit, P&L

Revenue + other income - Expenses