State the importance of Financial Analysis?
Financial Analysis has great importance to various accounting users on
various matters:
1. It helps in evaluating the profit earning capacity and financial feasibility of a business.
2. It helps in assessing the long-term solvency of the business.
53. Many business owners and company managers have found that insight gained from their examination of company financial statements can be invaluable. Such insight can help businesses improve their profitability, cash flow, and value.
Explain the usefulness of trend percentages in interpretation of financial performance of a company.
What do you understand by analysis and interpretation of financial statements? Discuss its importance.
Describe the different techniques of financial analysis and explain the limitations of financial analysis.
Explain how common size statements are prepared giving an example.
What is the importance of comparative statements? Illustrate youranswer with particular reference to comparative income statement.
List the techniques of Financial Statement Analysis.
What do you mean by Common Size Statements?
What are Comparative Financial Statements?
State the meaning of Analysis and Interpretation.
Distinguish between Vertical and Horizontal Analysis of financial data.
What do you mean by Ratio Analysis?
State the meaning of financial statement analysis?
What does a Bearer Debenture mean?
What are various types of ratios?
What are limitations of financial statement analysis?
State the meaning of ‘Debentures issued as a collateral security’.
What relationships will be established to study?
(a) Inventory Turnover (b) Debtor Turnover
(c) Payables Turnover (d) Working Capital Turnover
List any three objectives of analysing financial statements?
What is meant by ‘Issue of debentures for consideration other than cash’?
How will you disclose the following items in the Balance Sheet of a company;
(i) Loose tools
(ii) Uncalled liability on partly paid-up shares
(iii) Debentures redemption reserve
(iv) Mastheads and publishing titles (v) 10% debentures
(vi) Proposed dividend
(vii) Share forfeited account
(viii) Capital redemtion reserve
(ix) Mining rights
(x) Work-in-progress
The average age of inventory is viewed as the average length of time inventory is held by the firm or as the average number of days’ sales in inventory. Why?
Prepare the format of statement of profit and loss and explain its items.
How would you study the Solvency position of the firm?
What do you mean by Ratio Analysis?
The current ratio provides a better measure of overall liquidity only when a
firm’s inventory cannot easily be converted into cash. If inventory is liquid, the
quick ratio is a preferred measure of overall liquidity. Explain.
Explain the nature of the financial statements.
What is meant by ‘Issue of debentures for consideration other than cash’?
State the importance of financial statements to
(i) shareholders
(ii) creditors
(iii) government
(iv) investors
State the meaning of financial statement analysis?