financial statements analysis

Question 1

What is the purpose of a financial statement analysis

Answer 1

to measure a company’s health and performance based on the information provided in the statements provided

Question 2

what are general-purpose financial statements

Answer 2

balance sheets, statements of owner’s equity, statements of cash flows, and income statements

Question 3

ability to provide financial rewards to attract and retain financing

Answer 3

probability

Question 4

ability to meet long-term obligations and generate future revenues

Answer 4

solvency

Question 5

ability to meet short-term obligations and generate revenues efficiently

Answer 5

liquidity

Question 6

compares company performance to similar companies in the same industry. examines the internal structure of a business

Answer 6

vertical analysis( common size analysis

Question 7

compares company performance from previous periods using trends

Answer 7

horizontal analysis( trend analysis)

Question 8

ability to generate positive market trends

Answer 8

market profitability

Question 9

a tool used to tell if a company can pay off its current liabilities without selling off it’s inventory

Answer 9

acid-test ratio

Question 10

what are current assets composed of

Answer 10

short term securities, current recievables, and cash

Question 11

measures a companies ability to earn net income from sales

Answer 11

profit margin