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

Which type of financial analysis is most directly facilitated by the use of ratios when examining comparative balance sheets?

Ratio analysis

Trend analysis

Vertical analysis

Horizontal analysis

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Understand the purpose of each type of financial analysis mentioned in the problem: Ratio analysis, Trend analysis, Vertical analysis, and Horizontal analysis.

Ratio analysis involves calculating financial ratios to assess a company's performance, liquidity, profitability, and solvency. It is particularly useful for comparing financial data across periods or against industry benchmarks.

Trend analysis focuses on identifying patterns or trends in financial data over multiple periods, helping to predict future performance based on historical data.

Vertical analysis examines financial statements by expressing each item as a percentage of a base amount (e.g., total assets or total revenue), making it easier to analyze the relative size of components within a single period.

Horizontal analysis compares financial data across multiple periods to identify changes and growth rates, often expressed as percentages. This method is useful for spotting trends over time.