You will be asked 5 questions of 20 marks each. When evaluating the quality of accounting information, an analyst should consider all of the following except: Which of the following are characteristics of an extraordinary item? In a restructuring it is possible that managers may use the opportunity to write down assets that do not even relate directly to the restructuring action. Which of the following is not considered a motive to manage earnings? It includes examining trends in key financial data, comparing financial data across companies, and analyzing financial ratios. d) All of the above. Play as. Difficulty. There are some useful techniques involving simple math which can help you perform a financial statement analysis for your business. Choose the Correct Answer: 1. Companies HD and LD are both profitable, and they have the same total assets (TA), Sales (S), return on assets (ROA), and profit margin (PM). c) Cash Flow Statements. To examine how asset value is measured, let us begin with the way assets are categorized in the balance sheet. b. Again the difference between the returns of a financial statement analysis and interpretation based on management decisions were also discussed. Choose your answers to the questions and click 'Next' to see the next set of questions. Quiz Flashcard. Examples of poor earnings quality that hinder the forecasting of expected future earnings include all of the following except: The company adds equipment that reduces carbon emissions in response to EPA requirements and increases production efficiency. c) Ratio Analysis. A technique for evaluating financial statements that expresses the relationship among selected items of financial statement data is a. common size analysis. )Profitability ratios (5. be informative about current performance and provide information about the long-run sustainability of profits. As transitory components become a more important part of a firm's reported earnings, the reported earnings: are a less reliable indicator of sustainable cash flows. There are 20 questions in this test from the Financial Statement Analysis section of the CFA Level 1 syllabus. more. PLAY. The 3 Ps, i.e. The course includes a hands-on case study and Excel templates Excel & Financial Model Templates Download free financial model templates - CFI's spreadsheet library includes a 3 statement financial model template, DCF model, debt schedule, depreciation schedule, capital expenditures, interest, budgets, expenses, forecasting, charts, graphs, timetables, valuation, comparable company analysis, … STUDY. 1. Users of financial statements should consider which of the following when evaluating the quality of accounting information? Most commonly used tools for financial analysis are: a) Horizontal Analysis. Spell. Why might a manager decide to write down an asset that is not included in the restructuring action? Company HD has a higher ROE than Company LD. It should provide a complete and fair … Many times a financial analyst may decide to make adjustments to the financial statements in order to make the statements more useful. separately stated item on the income statement. Match. With our lesson, Financial Statement Analysis: Definition, Purpose, Elements & Examples, you'll be able to answer that question. Preparing Comparative Financial Statements is the most commonly used technique for analyzing financial statements. It should portray the economic resources that can be reasonably expected to generate future economic benefits. View Answer / Hide Answer. Knowledge of these factors could result in a reduction of invested funds in a business, or actions taken to investigate further. Which of the following actions would make it financially stronger? 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