(R19) Introduction to Financial Statement Analysis

Question 1

Primary purpose of financial reports

Answer 1

Provide information and data about a company’s financial position and performance

Question 2

Define equity

Answer 2

Residual claims on assets (aka net assets)

Question 3

Statement of comprehensive income

Answer 3

All items that change owners equity

Question 4

What do the notes of the financial statements include

Answer 4

Methods, assumptions, estimates

Question 5

What does MD&A include

Answer 5

Unaudited additional information

Question 6

Statement of operations

Answer 6

Income Statement

Question 7

Statement of financial position

Answer 7

Balance sheet

Question 8

Steps in the financial statement analysis framework.

Answer 8

1. State the objective of the analysis
2. Gather data
3. Process the data
4. Analyze and interpret the data
5. Report the conclusions or recommendations
6. Update the analysis