Financial Statement Analysis EXAMINATION SET 2026 SOLVED QUESTIONS GRADED A+

Financial Statement Analysis UPDATED
SCRIPT 2026 PRACTICE SOLUTIONS
GRADED A+

● Financial Ratios. Answer: Relationships between financial statement
amounts.


● Common Size Financial Statements. Answer: Creating useful #'s by
dividing all financial statement #'s by total sales for the year.


● The prediction of how a business will perform in the future. Answer:
When analyzing financial statements, prognosis is


● Financial ratios. Answer: Relationships between financial statement
amounts are called


● Investing Purposes. Answer: External users of financial statements
use financial statement analysis for


● Both past values and values for other firms in the same industry.
Answer: Financial statement analysis is greatly enhanced when financial
ratios are compared with

, ● The identification of where a business has problems. Answer: When
analyzing financial statements, diagnosis is


● Debt Ratios. Answer: Total liabilities divided by total assets. Debt
ratio represents the portion of borrowed funds used to acquire the
company's assets. 50% is average market median. DR=Total
Liabilities/Total Assets


● Liquidity. Answer: A companies ability to pay its debts in the short
run.


● Current Ratio. Answer: A comparison of current assets with current
liabilities.
CR= total current assets/total current liabilities.
*Historically, ratios below 2 suggest the possibility of liquidity
problems.


● Return on Sales. Answer: A measure of the amount of profit earned
per dollar of sales. ROS = Net Income/Sales


● Assets Turnover. Answer: A measure of a company's efficiency.
AT=Sales/Total Assets
*Higher the # the more efficient it is.