WALL STREET PREP ANALYZING FINANCIAL
REPORTS EXAM SCRIPT 2026 TEST PAPER
QUESTIONS AND SOLUTIONS GRADED A+
◉ In which stage of its life cycle is a business lacking experienced
management and has depleted most of the initial investment by the
owner? Answer: start-up stage
◉ Which option identifies the highest priority for a business in the
growth stage? Answer: find resources to support growth
◉ What are the typical primary funding sources for businesses in
the start-up stage? Answer: the owner's personal resources
◉ Which strategy will the owners of a declining business tend to
elect? Answer: retaining or transferring assets
◉ Which option identifies a broad look at how firms typically change
and develop over time? Answer: the business cycle
◉ What is the role of financial statement analysis? Answer: A
systematic examination and interpretation of a business's past
, performance, present financial position and be able to estimate
future risks and potential
◉ What are the basic steps in the financial analysis process?
Answer: 1. obtaining statements
2. processing statement
3. spreading statement
4. technical analysis
5. interpretive analysis
◉ What type of external financial statement is the least reliable?
Why? Answer: Compiled statements.
bc they omit most GAAP disclosures, including statements of cash
flows and footnotes
◉ What is common-sizing and why is it important in financial
statement analysis? Answer: A form of financial ratio analysis that
allows the comparison of companies with different levels of sales or
total assets by introducing a common denominator. Expresses each
item on the balance sheet as a percentage of total assets and each
item on the income statement as a percentage of net sales. Facilitates
analysis process
◉ Explain the difference between technical and interpretive analysis
Answer: Technical is examining the numbers in the data stating
REPORTS EXAM SCRIPT 2026 TEST PAPER
QUESTIONS AND SOLUTIONS GRADED A+
◉ In which stage of its life cycle is a business lacking experienced
management and has depleted most of the initial investment by the
owner? Answer: start-up stage
◉ Which option identifies the highest priority for a business in the
growth stage? Answer: find resources to support growth
◉ What are the typical primary funding sources for businesses in
the start-up stage? Answer: the owner's personal resources
◉ Which strategy will the owners of a declining business tend to
elect? Answer: retaining or transferring assets
◉ Which option identifies a broad look at how firms typically change
and develop over time? Answer: the business cycle
◉ What is the role of financial statement analysis? Answer: A
systematic examination and interpretation of a business's past
, performance, present financial position and be able to estimate
future risks and potential
◉ What are the basic steps in the financial analysis process?
Answer: 1. obtaining statements
2. processing statement
3. spreading statement
4. technical analysis
5. interpretive analysis
◉ What type of external financial statement is the least reliable?
Why? Answer: Compiled statements.
bc they omit most GAAP disclosures, including statements of cash
flows and footnotes
◉ What is common-sizing and why is it important in financial
statement analysis? Answer: A form of financial ratio analysis that
allows the comparison of companies with different levels of sales or
total assets by introducing a common denominator. Expresses each
item on the balance sheet as a percentage of total assets and each
item on the income statement as a percentage of net sales. Facilitates
analysis process
◉ Explain the difference between technical and interpretive analysis
Answer: Technical is examining the numbers in the data stating
