MD#4 : Financial Statement Analysis (1st Grading Period) Flashcards
1
Q
- It helps the user of financial statements make an informed decision or judgment rather than rely on guesses and intuition in the process of decision-making by effectively and systematically using the financial data.
A
Financial Analysis
2
Q
- These are are analyzed to evaluate a company’s present financial position and operating performance in relation to its past.
- Using these figures, the company can predict or forecast future operations.
A
Financial Statements
3
Q
Two Phases in Financial Statements
A
- Computation Phase
- Interpretation Pahse
4
Q
- We compute for differences, percentages, or ratios.
A
Computation Phase
5
Q
- We interpret the results of the figures we get from the first pahse.
A
Interpretation Phase
6
Q
The Different Methods and Techniques in Analyzing Financial Data
A
- Horizontal Analysis
- Vertical Analysis
- Trend Analysis
- Financial Ratio Analysis
7
Q
- It compares the same account in the financial statements of two periods ( current and past year) determining the amount of changes and computing its percentage change using a base year as comparison.
A
Horizontal Analysis
8
Q
- It shows the relationship of each part to the whole in a single financial statement.
- In the Statement of Financial Position, each item is expressed as a percentage of total
assets or total liabilities and owner’s equity. - In the Income Statement, each item is presented as a percentage of Net Sales.
A
Vertical Analysis
9
Q
- It compares not only two years but covers, three, four, or five years’ financial statements.
- This is to determine the trends in the industry.
A
Trend Analysis
10
Q
- It describes the significant relationship between the numbers presented in the financial statements. Ratios can be expressed either as a rate, percentage or proportion.
A
Financial Ratio Analysis
