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Exam 12: Financial Statement Analysis

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Question 21

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Financial statement analysis would include

A) calculating ratios.
B) looking at relationships with the financial statements.
C) comparing results with industry benchmarks.
D) all of the above

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Question 22

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Which of the following descriptions best describes cross-sectional analysis?

A) converting dollar values on the financial statements to percentages of a specific base amount
B) comparing data from one company to with those of another company over the same period
C) examining company information from multiple periods
D) using historical information as a basis for predicting future outcomes

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Question 23

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Which of the following is not a general category of ratios?

Common-size analysis is useful for making comparisons across the various financial statements.

Free cash flow is a commonly used non-IFRS financial measure.

To see if a company's cost of sales is increasing proportionately with sales,an analyst would use

Retrospective analysis reviews past trends in order to help predict the future.

The auditor's report guarantees the accuracy of the information presented in the financial statements.

When analyzing companies that have diverse business activities,analysts should not rely on segmented information.

Which of the following is a short-term liquidity ratio?

Ratios exhibit the relationship between figures from year to year and the reason for the changes year to year.

Prospective analysis is known as a forward-looking analysis.

Financial measures or ratios that are not prepared using information taken directly from these financial statements are referred to as or GAAP financial measures.

Given the following data: sales $1,500,000;gross profit $640,000;net income $40,000 and income tax expense $35,000.What is the common-size percentage for the cost of sales?

Analyzing financial data on the same company over time is called cross-sectional analysis.

Given the following data: sales $1,500,000;gross profit $640,000;net income after tax $40,000 and income tax expense $35,000.What is the common-size percentage for operating expenses?

In order to understand a company's business,an analyst must understand the corporation's strategy.Which of the following is an example of a corporate strategy?

Which of the following represents the debt/equity ratio?

The analysis of financial statements to assist in predicting future results is an example of

Ratios are useful in explaining the