Financial Statement Review and Analysis Flashcards
A proportional analysis of a financial statement where each account balance is compared against a base number in the same financial statement
Vertical Analysis
A report that compares financial statements over multiple accounting periods
Comparative Statement
Ratios used to measure a company’s ability to generate profit relative to its revenue
Profitability Ratios
The profitability ratio used to measure net income relative to total revenue, also called “net margin”
Net Profit Margin
A profitability ratio used to measure total expenses relative to total revenue
Expense Ratio
a standard by which financial metrics can be compared
Benchmark
The act of borrowing money to purchase assets
Leverage
An organizations ability to meet its financial obligations owed creditors
Solvency
A ratio used to measure a company’s degree of leverage
Leverage Ratio
the leverage ratio used to measure total liabilities relative to total assets
Debt Ratio
A time based analysis of financial statements or financial Ratios across multiple accounting periods, often called trend analysis
Horizontal Analysis