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

Common types of analysis that help assess a specific company's performance include comparisons:

with the company's own past performance (trend analysis)

solely with the company's projected future performance

exclusively with companies in unrelated industries

only with the industry average, ignoring the company's history

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Verified step by step guidance

Understand the concept of performance analysis: Performance analysis involves evaluating a company's financial and operational results to assess its health and efficiency. It helps stakeholders make informed decisions.

Learn about trend analysis: Trend analysis is a method of comparing a company's current performance with its past performance over time. This helps identify patterns, growth, or decline in key metrics such as revenue, profit, or expenses.

Recognize the importance of industry comparisons: Comparing a company's performance to the industry average provides context and helps determine whether the company is performing better or worse than its peers. However, this should not ignore the company's historical data.

Avoid irrelevant comparisons: Comparing a company to unrelated industries or solely to projected future performance may not provide meaningful insights. These comparisons lack relevance to the company's current operational context.

Combine multiple approaches: Effective performance analysis often involves using a combination of trend analysis, industry comparisons, and projections to gain a comprehensive understanding of the company's position and future potential.