10. Which of the following is not a tool or technique used by a financial statement analyst? a. Common size financial statements b. Trend analysis c. Random sampling analysis d. Industry comparisons 11. In each of the past five years, the net sales of Beta Co. have increased at about half the rate of inflation, but net income has increased at approximately twice the rate of inflation. During this period, the company's total assets, liabilities and equity have
12 remained almost unchanged; dividends are approximately equal to net income.These relationships suggest (indicate all correct answers): 12. Holly Corporation's net income was P400.000 in 2018 and P160,000 in 2019. What percentage increase in net income must Holly achieve in 2020 to offset the decline in profits in 2019? 13. In financial statement analysis, the most difficult of the following items to predict is whether: Summary Review of the financial statements gives an insight as to what is going to occur in the future. Base from the current financial information, financial Statements users determine if the situation is improving, deteriorating or staying constant. They gain insight into the direction in which future results are likely to shift by comparing existing data which are similar from previous period. Other comparative standards involve businesses with other similar businesses, comparison with standards and comparison with information from previous years. Through comparing empirical data for one business with a certain objective criterion, the analyst aims
13 to assess how the business's position in question is comparable with certain performance expectations. Financial ratios highlights movements, relationships, and patterns that are very hard to discern, given that the unprocessed underlying data stand on its own. Financial data ratios are also easier to comprehend through organizing the data into your point of view. Reference Cabrera, E.B., & Cabrera, G.A., (2017). Management Accounting: Concepts and Applications. Manila, Philippines: Conanan Enterprises
MODULE 2 FINANCIAL STATEMENT ANALYSIS – PART 2 Introduction The first module focuses on the part 1 of the financial statement analysis. This module will focus on the computation of the financial ratios, its purpose and limitations, as well as the illustration of the various types of ratios namely: activity ratios, profitability ratios, leverage ratios, and liquidity ratios.
You've reached the end of your free preview.
Want to read all 52 pages?