ACCT 212 Chapter 13

To prepare common-size financial statements, each line item needs to be calculated to a common-size percent. The formula for common-size percent is (Blank______) x 100.

analysis amount/base amount

The complete income statement is separated into the following sections:

discontinued segments continuing operations earnings per share

Trend percent is computed by taking the (analysis period amount Blank______) x 100.

divided by the base period

A measurement of key relations between financial statement items is called Blank______ analysis.

ratio

The Blank______ ratio measures a company's market expectations for future growth.

price-earnings

______ refers to a company's makeup of equity and debt financing.

Capital structure

Identify which of the following sections are part of the six sections that make up an analysis report.

Assumptions Key factors Executive summary

- financial statements express each item as a percent of a base amount. The base amount is assigned a value of 100%.

Blank 1: Common Blank 2: Size

financial statements show financial amounts in side-by-side columns on a single statement.

Blank 1: Comparative

(Internal/External) users of accounting information rely on financial statement analysis to make more informed decisions when pursuing their goals.

Blank 1: External

refers to a company's ability to generate an adequate return.

Blank 1: Profitability

A financial statement report consists of an executive summary, analysis overview, evidential matter, assumptions, key factors, and inferences.

Blank 1: analysis

Vertical analysis is also called - analysis.

Blank 1: common Blank 2: size

The purpose of financial statement analysis for (internal/external) users is to provide information to improve efficiency and effectiveness.

Blank 1: internal

An investor in Able Inc. would like to understand Able's availability of resources to pay its short-term cash requirements. This type of analysis is known as a(n) (efficiency/liquidity) measure.

Blank 1: liquidity

The ratio is computed by taking market price per common share divided by earnings per share.

Blank 1: price-earnings or PE

A(n) (chart/ratio/statement) is used to uncover conditions and trends difficult to see by looking at individual amounts. It can be expressed as a percent, rate, or proportion.

Blank 1: ratio or ratios

Vertical analysis is a tool to evaluate individual financial statement items or a group of items. When analyzing income statement accounts, the base is usually (revenue/expenses/net income) and for balance sheet accounts, the base is usually total (assets/liabilities/equity) .

Blank 1: revenue Blank 2: assets

(Solvency/efficiency) refers to a company's ability to meet long-term obligations and generate future revenues.

Blank 1: solvency

When interpreting measures from financial statement analysis, we need (or benchmarks) for comparisons.

Blank 1: standards

A comparison of a company's financial condition and performance to a base amount, such as total assets, is called (horizontal/vertical) analysis.

Blank 1: vertical

Identify and match the major parts of the complete income statement.

Continuing Operations matches Choice Shows revenues, expenses, and income from ongoing operations. Discontinued Segments matches Choice Reports income from selling or closing a segment and income or loss from operating a discontinued segment. Earning per share matches Choice Reports information for each of the three subcategories of income

refers to the availability of resources to pay short-term cash requirements. Analysis is aimed at a company's funding requirements.

Liquidity

______ refers to a company's ability to generate an adequate return.

Profitability

Which of the following areas are not considered to be one of the building blocks of financial statement analysis?

Ratio analysis

are widely used tools of financial analysis that can help us uncover conditions and trends difficult to detect by inspecting individual amounts.

Ratios

Identify which of the following specific areas are considered the building blocks of financial statement analysis.

Solvency Market prospects Profitability Liquidity and efficiency

Most users rely on general-purpose financial statements, which include which of the following?

Statement of stockholders' equity Statement of cash flows Balance sheet Notes to financial statements Income statement

analysis is a form of horizontal analysis that can reveal patterns in data across periods by comparing period amounts by base period amounts.

Trend

All of the following are standards used in financial statement analysis for comparisons:

intracompany industry competitor

Comparative financial statements show financial information in Blank______ columns.

side-by-side

Visualizations are used to identify:

sources of financing investing activities.

Data visualizations reveal:

trends not easily seen by looking at numbers insights not easily seen by looking at numbers