Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

14. Financial Statement Analysis

Introduction to Ratios

Financial Accounting

14. Financial Statement Analysis

Introduction to Ratios

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Multiple Choice

A ratio analysis combines information from which two financial reports?

Balance Sheet and Statement of Retained Earnings

Balance Sheet and Income Statement

Statement of Cash Flows and Statement of Retained Earnings

Statement of Cash Flows and Income Statement

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Verified step by step guidance

Understand the purpose of ratio analysis: Ratio analysis is used to evaluate a company's financial performance and position by analyzing relationships between different financial statement items.

Identify the financial reports involved: Ratio analysis typically requires data from the Balance Sheet and the Income Statement. The Balance Sheet provides information about a company's financial position at a specific point in time, while the Income Statement shows the company's financial performance over a period of time.

Recognize why the Balance Sheet and Income Statement are used: Ratios such as the current ratio, debt-to-equity ratio, and return on equity require data from the Balance Sheet, while profitability ratios like net profit margin and gross profit margin require data from the Income Statement.

Eliminate incorrect options: The Statement of Retained Earnings and Statement of Cash Flows are not primary sources for most ratio analyses. While they provide useful information, they are not typically combined for ratio calculations.

Conclude that the correct answer is the Balance Sheet and Income Statement, as these two reports provide the necessary data for most financial ratios used in analysis.