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 group analysis is used to establish a benchmark when using financial ratios?

Vertical analysis

Horizontal analysis

Industry group analysis

Liquidity analysis

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Verified step by step guidance

Understand the concept of financial ratios: Financial ratios are tools used to evaluate a company's financial performance and position by comparing various financial metrics.

Learn about the types of analysis: Vertical analysis compares financial statement items within a single period, horizontal analysis compares financial data across multiple periods, and liquidity analysis focuses on a company's ability to meet short-term obligations.

Recognize the purpose of industry group analysis: Industry group analysis involves comparing a company's financial ratios to those of other companies within the same industry to establish a benchmark and assess relative performance.

Identify why industry group analysis is the correct answer: Industry group analysis provides context for financial ratios by considering industry standards, which helps in benchmarking and evaluating a company's competitive position.

Apply this understanding: When using financial ratios, always consider the industry group analysis to ensure comparisons are meaningful and aligned with industry norms.