Ugh Flashcards
Management
Internal
Investors, creditors, government, and regulatory agencies
External
Financial statement analysis is used to
Assess past performance and current position
Assess future potential and risk associated with that potential
Should not he the sole basis of evaluation
Role of thumb
Benchmarking
Comparison with industry norms
Management discussion and analysis of operations
Report of independent registered public accounting firm
Financial statements
Notes to financial statements
Corporate annual report
Shows absolute and percentage changes from one year to the next
Horizontal analysis
Base year
Horizontal analysis
Percentage changes are calculated for several consecutive years
Trend analysis
Index numbers
Trend analysis
Percentage represented by individual items on the statement in relation to a total within the statement
Vertical analysis
Common size statement
Vertical analysis
Determining certain relationship ratios between financial statement items and comparing the ratios with those prior years
Ratio analysis
