Financial Analysis Flashcards
1
Q
Horizontal Analysis
A
study of percentage changes in comparative financial statements
2
Q
Vertical Analysis
A
analysis of a financial statement that reveals the relationship of each statement item to a specified base, which is the 100% figure.
3
Q
Specified Base for Statement of Earnings
A
Base is sales (total assets
4
Q
Calculation for ROE
A
5
Q
Current Ratio
A
CR = CA / CL
Current Ratio = CurrentAssets / CurrentLiabilities
Called the “Bankers Rule of Thumb”
If CR>1 then CA>CL, If C<1 then CA>CL, therefor cashflow is liquid
Quick Ratio = (CA - Inventory)/CL
6
Q
A
