CFA Financial Statement Analysis (1)
Exam with Verified Detailed Answers
Providing information about the performance and financial position
of companies so that users can make economic decisions best
describes the role of:
A) auditing.
B) financial reporting.
C) financial statement analysis. -
correct answer ✅B) financial reporting
-This is the role of financial reporting. The role of financial
statement analysis is to evaluate the financial reports.
Which of the following best describes the role of financial
statement analysis?
A) To provide information about a company's performance
B) To provide information about a company's changes in financial
position
C) To form expectations about a company's future performance and
financial position -
correct answer ✅C) To form expectations about a company's
future performance and financial position
,CFA Financial Statement Analysis (1)
Exam with Verified Detailed Answers
-In general, analysts seek to examine the past and current
performance and financial position of a company in order to form
expectations about its future performance and financial position.
The role of financial statement analysis is best described as:
A) providing information useful for making investment decisions.
B) evaluating a company for the purpose of making economic
decisions.
C) using financial reports prepared by analysts to make economic
decisions. -
correct answer ✅B) evaluating a company for the purpose of
making economic decisions
-The primary role of financial statement analysis is to use financial
reports prepared by companies to evaluate their past, current, and
potential performance and financial position for the purpose of
making investment, credit, and other economic decisions.
Ratios are an input into which step in the financial statement
analysis framework?
,CFA Financial Statement Analysis (1)
Exam with Verified Detailed Answers
A) Process data.
B) Collect input data.
C) Analyze/interpret the processed data. -
correct answer ✅C) Analyze/interpret the processed data
-Ratios are an output of the process data step but are an input into
the analyze/interpret data step.
Which phase in the financial statement analysis framework is most
likely to involve producing updated reports and recommendations?
A) Follow-up
B) Analyze/interpret the processed data
C) Develop and communicate conclusions and recommendations -
correct answer ✅A) Follow-up
-The follow-up phase involves gathering information and repeating
the analysis to determine whether it is necessary to update reports
and recommendations.
, CFA Financial Statement Analysis (1)
Exam with Verified Detailed Answers
Common-size financial statements are most likely a component of
which step in the financial analysis framework?
A) Collect data
B) Analyze/interpret data
C) Process data -
correct answer ✅C) Process data
-Preparing common-size financial statements is part of the process
data step.
A company's financial position would best be evaluated using the:
A) balance sheet.
B) income statement.
C) statement of cash flows. -
correct answer ✅A) balance sheet
Exam with Verified Detailed Answers
Providing information about the performance and financial position
of companies so that users can make economic decisions best
describes the role of:
A) auditing.
B) financial reporting.
C) financial statement analysis. -
correct answer ✅B) financial reporting
-This is the role of financial reporting. The role of financial
statement analysis is to evaluate the financial reports.
Which of the following best describes the role of financial
statement analysis?
A) To provide information about a company's performance
B) To provide information about a company's changes in financial
position
C) To form expectations about a company's future performance and
financial position -
correct answer ✅C) To form expectations about a company's
future performance and financial position
,CFA Financial Statement Analysis (1)
Exam with Verified Detailed Answers
-In general, analysts seek to examine the past and current
performance and financial position of a company in order to form
expectations about its future performance and financial position.
The role of financial statement analysis is best described as:
A) providing information useful for making investment decisions.
B) evaluating a company for the purpose of making economic
decisions.
C) using financial reports prepared by analysts to make economic
decisions. -
correct answer ✅B) evaluating a company for the purpose of
making economic decisions
-The primary role of financial statement analysis is to use financial
reports prepared by companies to evaluate their past, current, and
potential performance and financial position for the purpose of
making investment, credit, and other economic decisions.
Ratios are an input into which step in the financial statement
analysis framework?
,CFA Financial Statement Analysis (1)
Exam with Verified Detailed Answers
A) Process data.
B) Collect input data.
C) Analyze/interpret the processed data. -
correct answer ✅C) Analyze/interpret the processed data
-Ratios are an output of the process data step but are an input into
the analyze/interpret data step.
Which phase in the financial statement analysis framework is most
likely to involve producing updated reports and recommendations?
A) Follow-up
B) Analyze/interpret the processed data
C) Develop and communicate conclusions and recommendations -
correct answer ✅A) Follow-up
-The follow-up phase involves gathering information and repeating
the analysis to determine whether it is necessary to update reports
and recommendations.
, CFA Financial Statement Analysis (1)
Exam with Verified Detailed Answers
Common-size financial statements are most likely a component of
which step in the financial analysis framework?
A) Collect data
B) Analyze/interpret data
C) Process data -
correct answer ✅C) Process data
-Preparing common-size financial statements is part of the process
data step.
A company's financial position would best be evaluated using the:
A) balance sheet.
B) income statement.
C) statement of cash flows. -
correct answer ✅A) balance sheet
