Chapter 17 Flashcards
Annual report
provides information about a company’s financial condition
MD & A
Management’s Discussion and Analyses of Financial Condition and Results of Operations
MD&A contains
information not found on financial documents such as explanation of increased costs, and plans for increased revenues
report of independent registered public accounting firm AKA
Auditor’s report
unqualified opinion
financial statements are presented fairly in all material respects
qualified opinion
may be issued if financial statments do not meet GAAP
Adverse Opinion
statements are not presented fairly
Horizontal Analysis compares a company to ____ year over year
itself
Comparative statements show the change in both ____ and _____
amount; percent
trend analysis is horizontal analyis based on one ___ ____ to show trends over time
base period
vertical analysis compares the ______ ______ of each item to it’s base. for example, rent expense as a ____ of total ____
proportional relationship, percentage, expenses
vertical analysis is useful in comparing _____ against each other, and measuring _____ and _____
companies ; profitability, liquidity
common size statements show only ___ when comparing companies to remove _____ ____ ____
percentages, dollar sign bias
dollar sign bias
bias from comparing numbers without considering them in their relative terms.
benchmarking is a practice of comparing
a company’s performance with other industry companies
working capital measures the business’ ability to meet it’s ____ ____ _____ with _____ _____
short term obligations, current assets
cash ratio measures the ability to pay ______ from _____ and ____ ____
liabilities, cash, cash equivalents
Acid test or quick ratio measures overall ______
liquidity
