D366 Financial statement analysis Questions with
complete solution 2025/2026
Balance sheet Statement of financial position that tells you:
1. the company's assets
2. how those assets are financed
assets = liabilitiies + equity
Snapshot of a company at a particular point in time.
2. Balance 6.
Sheet
usefulness
3. Balance
sheet
weaknesse
s
4. Tools for
Analyz- ing
the Balance
Sheet
5. Income
state- ment
,-assess creditworthiness operations aka P & L
-determine book value of statement
firm is the company making
-assess ability to pay money? Are sales/profits
dividends or make capital growing?
investments
What are company expenses?
-calculate rates of returns
Can predict future profits and value the company?
-does not give fair market
value (FMV)
measures performance?
-unrecorded assets
-understated assets
-ott balance sheet items
-ratios
-common-size balance
sheet (% assets)
-Trend balance sheet (%
change)
a
k
a
s
t
a
t
e
m
e
n
t
o
f
, D366 Financial statement analysis
Tools for -cause of change analysis
analyz- ing -common-size income statement
the income -EPS: Earnings per share
statement
shows why cash balance changed (where?)
7. Statement
-where is cash coming from?
of Cash
-Are those sources of cash sustainable
flows
3 sections:
-operating (cash-basis net income)
-investing (acquisition/disposals of fixed assets/investments)
-financing (transactions w/ owners and creditors)
1. Predict future cash flows
8. Usefulness -DCF (discounted cash flows)
of -FCF (free cash flow)
statement 2. See where the company is in its life-cycle
of cash
flows | Startup | Mature | Distressed.
Operating | - | + | -
Investing | - | - | +
Financing | + | +/- | +/-
9. Vertical Analysis Common size analysis!
Common-size income statement: each item expressed as a %
of sales Common-size balance sheet: each item expressed as a
% of total assets
10. Horizontal We take a line item and look how that changes over time
analy- sis
-trend statements
complete solution 2025/2026
Balance sheet Statement of financial position that tells you:
1. the company's assets
2. how those assets are financed
assets = liabilitiies + equity
Snapshot of a company at a particular point in time.
2. Balance 6.
Sheet
usefulness
3. Balance
sheet
weaknesse
s
4. Tools for
Analyz- ing
the Balance
Sheet
5. Income
state- ment
,-assess creditworthiness operations aka P & L
-determine book value of statement
firm is the company making
-assess ability to pay money? Are sales/profits
dividends or make capital growing?
investments
What are company expenses?
-calculate rates of returns
Can predict future profits and value the company?
-does not give fair market
value (FMV)
measures performance?
-unrecorded assets
-understated assets
-ott balance sheet items
-ratios
-common-size balance
sheet (% assets)
-Trend balance sheet (%
change)
a
k
a
s
t
a
t
e
m
e
n
t
o
f
, D366 Financial statement analysis
Tools for -cause of change analysis
analyz- ing -common-size income statement
the income -EPS: Earnings per share
statement
shows why cash balance changed (where?)
7. Statement
-where is cash coming from?
of Cash
-Are those sources of cash sustainable
flows
3 sections:
-operating (cash-basis net income)
-investing (acquisition/disposals of fixed assets/investments)
-financing (transactions w/ owners and creditors)
1. Predict future cash flows
8. Usefulness -DCF (discounted cash flows)
of -FCF (free cash flow)
statement 2. See where the company is in its life-cycle
of cash
flows | Startup | Mature | Distressed.
Operating | - | + | -
Investing | - | - | +
Financing | + | +/- | +/-
9. Vertical Analysis Common size analysis!
Common-size income statement: each item expressed as a %
of sales Common-size balance sheet: each item expressed as a
% of total assets
10. Horizontal We take a line item and look how that changes over time
analy- sis
-trend statements
