Financial Statement Analysis//Exam
1--Chapter 1 Questions & Answers
(Grade A+)
Financial Statement Analysis -
correct answer ✅the process of extracting information from
financial statements to better understand a company's current and
future performance and financial condition
Valuation -
correct answer ✅process of drawing on the results of financial
statement analysis to estimate a company's worth (enterprise
value)
Financial Statement Analysis & Valuation 4-Step Process -
correct answer ✅Step 1- Where does the firm operate?
Understand the business environment and accounting info
Step 2- Where is the firm currently?
Adjusting and assessing financial information and accounting
information (profitability analysis, credit analysis, operations,
investing, financing)
Step 3- Where is the firm going?
Forecasting Financial Information
,Financial Statement Analysis//Exam
1--Chapter 1 Questions & Answers
(Grade A+)
Step 4- What is the firm worth?
Using information for valuation (cost of capital and valuation basics,
cash flow based valuation, operating income based valuation,
market Based valuation)
3 main groups of financial statement users -
correct answer ✅1) Investors and equity analysts
2) Lenders and credit analysts
3) Company managers and employees
4 activities companies undertake -
correct answer ✅1) PLAN business activities
2) FINANCE those activities
3) INVEST in those activities
4) then engage in OPERATING activities
Managers and employees -
correct answer ✅use financial accounting info to gauge current
and future financial health
, Financial Statement Analysis//Exam
1--Chapter 1 Questions & Answers
(Grade A+)
Investment analysts and information intermediaries -
correct answer ✅use financial accounting info to predict future
performance
Creditors and suppliers -
correct answer ✅use financial accounting info to determine loan
terms, loan amounts, interest rates, and collateral
Stockholders and directors -
correct answer ✅use financial accounting info to assess
profitability and risks and glean other information useful in their
investment decisions
Customers and strategic partners -
correct answer ✅use financial accounting info to assess a
company's ability to provide products or services and assess the
company's staying power and reliability
Regulators and tax agencies -
correct answer ✅use financial accounting info to handle antitrust
1--Chapter 1 Questions & Answers
(Grade A+)
Financial Statement Analysis -
correct answer ✅the process of extracting information from
financial statements to better understand a company's current and
future performance and financial condition
Valuation -
correct answer ✅process of drawing on the results of financial
statement analysis to estimate a company's worth (enterprise
value)
Financial Statement Analysis & Valuation 4-Step Process -
correct answer ✅Step 1- Where does the firm operate?
Understand the business environment and accounting info
Step 2- Where is the firm currently?
Adjusting and assessing financial information and accounting
information (profitability analysis, credit analysis, operations,
investing, financing)
Step 3- Where is the firm going?
Forecasting Financial Information
,Financial Statement Analysis//Exam
1--Chapter 1 Questions & Answers
(Grade A+)
Step 4- What is the firm worth?
Using information for valuation (cost of capital and valuation basics,
cash flow based valuation, operating income based valuation,
market Based valuation)
3 main groups of financial statement users -
correct answer ✅1) Investors and equity analysts
2) Lenders and credit analysts
3) Company managers and employees
4 activities companies undertake -
correct answer ✅1) PLAN business activities
2) FINANCE those activities
3) INVEST in those activities
4) then engage in OPERATING activities
Managers and employees -
correct answer ✅use financial accounting info to gauge current
and future financial health
, Financial Statement Analysis//Exam
1--Chapter 1 Questions & Answers
(Grade A+)
Investment analysts and information intermediaries -
correct answer ✅use financial accounting info to predict future
performance
Creditors and suppliers -
correct answer ✅use financial accounting info to determine loan
terms, loan amounts, interest rates, and collateral
Stockholders and directors -
correct answer ✅use financial accounting info to assess
profitability and risks and glean other information useful in their
investment decisions
Customers and strategic partners -
correct answer ✅use financial accounting info to assess a
company's ability to provide products or services and assess the
company's staying power and reliability
Regulators and tax agencies -
correct answer ✅use financial accounting info to handle antitrust
