Financial Reporting and Analysis
Concise flashcards on financial statement analysis from the study pack.
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Q. What is financial statement analysis?
A. It is the process of analyzing a company’s financial statements for decision-making purposes.
Q. What are the main tools of analyzing financial statements in the material?
A. Common size analysis, comparative analysis, and ratio analysis.
Q. What are the two categories of common size analysis?
A. Vertical analysis and horizontal analysis.
Q. In vertical analysis of the income statement, what is the base account?
A. Sales revenue, which is treated as 100%.
Q. What does the current ratio indicate?
A. It indicates the number of times current liabilities can be paid out of current assets.
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