Financial Statement Review and Analysis

Question 1

A proportional analysis of a financial statement where each account balance is compared against a base number in the same financial statement

Answer 1

Vertical Analysis

Question 2

A report that compares financial statements over multiple accounting periods

Answer 2

Comparative Statement

Question 3

Ratios used to measure a company’s ability to generate profit relative to its revenue

Answer 3

Profitability Ratios

Question 4

The profitability ratio used to measure net income relative to total revenue, also called “net margin”

Answer 4

Net Profit Margin

Question 5

A profitability ratio used to measure total expenses relative to total revenue

Answer 5

Expense Ratio

Question 6

a standard by which financial metrics can be compared

Answer 6

Benchmark

Question 7

The act of borrowing money to purchase assets

Answer 7

Leverage

Question 8

An organizations ability to meet its financial obligations owed creditors

Answer 8

Solvency

Question 9

A ratio used to measure a company’s degree of leverage

Answer 9

Leverage Ratio

Question 10

the leverage ratio used to measure total liabilities relative to total assets

Answer 10

Debt Ratio

Question 11

A time based analysis of financial statements or financial Ratios across multiple accounting periods, often called trend analysis

Answer 11

Horizontal Analysis