FSA objectives and tool

Question 1

ratio vs. index

Answer 1

ratio= relation between 2 values
index= percentage between 2

Question 2

limitations of working with ratio’s

Answer 2

• lack of harmonization in financial statements
• interprise concentration & multiactivity
• reduce complex info to a few variables
• lack of standardizes terminology

Question 3

advantages of working with raito’s

Answer 3

• expresses relationships between variables via economic link
• reduces complex info to a few variables
• transform and adapt accounting info to compare it

Question 4

horizontal vs. vertical percentages

Answer 4

horizontal= compare values of items in the balance sheet & income statement with a base/references
- discloses trends for every item in financial statement
vertical= check relative weight of any item or group related to something else in financial statement

Question 5

patrimonia analysis

Answer 5

assets & liabilities

Question 6

financial analysis

Answer 6

profitability

Question 7

economic analysis

Answer 7

evaluation of different elements in results and margins