A+ Graded Paper
FI 320 – Exam 1 Answer Pack | Proven A+ Resource
with Full Solutions
Questions and Mark scheme
Version: Final 1.1
, Standardized financial statements - ✔✔Convert statements from dollars to percentages
Common-Size Statements
---Common-Size Balance Sheets
---Common-Size Income Statements
Common-Base Year Statements - Trend Analysis
common size statement - ✔✔financial stamens presenting all items in percentages so you can compare
common base year statement - ✔✔standardized financial statement presenting all items relative to a certain base year
amount
du point - ✔✔breaks down return on equity - breaks down a formula to identify a problem - breaks down into 3 basic
categories profit margin , total asset turnover and financial leverage
problems with financial stamens - ✔✔There is no underlying theory
Benchmarking is difficult for diversified firms
Globalization and international competition makes comparison more difficult
Varying accounting procedures
Different fiscal years
Extraordinary events
benchmarking - ✔✔Ratios are not very helpful by themselves; they need to be compared to something
Time-Trend Analysis
Peer Group Analysis- identify firms that are similar and then compare
Why Evaluate Financial Statements? - ✔✔Internal uses
Performance evaluation
Planning for the future
External uses
Investment potential
Lending evaluation
FI 320 – Exam 1 Answer Pack | Proven A+ Resource
with Full Solutions
Questions and Mark scheme
Version: Final 1.1
, Standardized financial statements - ✔✔Convert statements from dollars to percentages
Common-Size Statements
---Common-Size Balance Sheets
---Common-Size Income Statements
Common-Base Year Statements - Trend Analysis
common size statement - ✔✔financial stamens presenting all items in percentages so you can compare
common base year statement - ✔✔standardized financial statement presenting all items relative to a certain base year
amount
du point - ✔✔breaks down return on equity - breaks down a formula to identify a problem - breaks down into 3 basic
categories profit margin , total asset turnover and financial leverage
problems with financial stamens - ✔✔There is no underlying theory
Benchmarking is difficult for diversified firms
Globalization and international competition makes comparison more difficult
Varying accounting procedures
Different fiscal years
Extraordinary events
benchmarking - ✔✔Ratios are not very helpful by themselves; they need to be compared to something
Time-Trend Analysis
Peer Group Analysis- identify firms that are similar and then compare
Why Evaluate Financial Statements? - ✔✔Internal uses
Performance evaluation
Planning for the future
External uses
Investment potential
Lending evaluation
