Analysis of Financial Statements

Question 1

Process of selecting related data from financial statements

Answer 1

Analysis of Financial Statements

Question 2

Purpose of Analysis of Financial Statements

Answer 2

1.) Evaluating a company’s present financial position
2.) Predicting or Forecasting

Question 3

Kinds of Phases

Answer 3

Computation and Interpretation Phase

Question 4

Compute for difference, percentage, or ratios

Answer 4

Computation Phase

Question 5

Interpret the tesults of the figures from the first phase

Answer 5

Interpretation Phase

Question 6

Compares the same account in the financial statements of two periods.

Answer 6

Horizontal (Comparative) Analysis

Question 7

What is the purpose of Horizontal Analysis?

Answer 7

• Helps management analyze increases and decreases
• Reflects the differences in peso amount
• Solve for peso change and percentage change

Question 8

Formula for PESO CHANGE

Answer 8

= Current Year - Base Year

Question 9

Formula for PERCENTAGE CHANGE

Answer 9

= (Peso Change / Base Year) x 100

Question 10

Relationship of each part of the whole in a single financial statment (in percentage form).

Answer 10

Vertical Analysis (Common Size)

Question 11

All Items are expressed as PERCENTAGE OF SALES

Answer 11

Vertical Analysis of INCOME STATEMENT

Question 12

All items are expressed as a percentage of total assets

Answer 12

Vertical Analysis of BALANCE SHEET

Question 13

Formula for Vertical Analysis

Answer 13

= (Peso Amount / Base) x 100

Question 14

Base of Statement of Financial Position (Balance Sheet)

Answer 14

Total Assets

Question 15

Base of Statement of Comprehensive Income

Answer 15

Total Net Sales

Question 16

Base of Statement of Cash Flows

Answer 16

Total Cash Available for Use

Question 17

Order of Accounts in Comprehensive Income

Answer 17

Net Sales
COGS
Gross Income
Selling and Administrative Expense
Operating Income
Interest Expense
Net Income before Tax Expense
Tax Expense
Net Income

Question 18

Order of Titles for Statement of Cash Flows

Answer 18

Cash Flow from Operating Activities
Receipts
Payments
Net Cash from Operating Activities
Cash Flow from Investing Activities
Receipts
Payments
Net Cash from Investing Activities
Cash Flow from Financing Activities
Receipts
Payments
Net Cash from Financing Activities
Net Increase/Decrease in Cash
Cash Balance, January 1
Cash Balance, December 31

Question 19

Order of Titles in Balance Sheet or Statement of Financial Position

Answer 19

Assets
Current Assets
Total Current Assets
Non-Current Assets
Total Non-Current Assets
Total Assets

Liabilities and Owner’s Equity
Liabilities
Current Liabilities
Total Current Liabilities
Non-Current Liabilities
Total Non-Current Liabilities
Total Liabilities
Owner’s Equity
Total Liabilities and Owner’s Equity

Question 20

Order of Inputing Peso Amount, Change of Amount, and Percentages

Answer 20

Current Year > % > Base Year > % > Peso Change > %