chapter 4 read and review questions (1)

chapter 4 read and review questions (1) - Name REVIEW AND...

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Name: REVIEW AND DISCUSSION QUESTIONS Chapter 4 – Analysis of Financial Statements 1. What is the purpose of financial statement analysis ? 2. Give an example of how financial statements can be used internally by the managers of a company. 3. List and briefly describe the three types of financial statement analysis. 4. If a company had sales of $2,587,643 in 2008 and sales of $3,213,456 in 2013, by what percentage did sales change during this time period? If the company had a goal of increasing sales by 25% over a five-year period, did it meet its objectives? 5. If the company in question 4 had set a goal of increasing sales by 28% during the next five years, what should be the sales goal for 2018? 6. List and briefly describe the five categories of business ratios. 7. If a company computes its current ratio to be 3.56, what does this mean in terms of the company’s current assets and current liabilities? 8. Why might a company have a high current ratio but a low quick ratio (acid test ratio)?
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