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Fake Quiz answers

Fake Quiz answers. Chapter 4. Purpose of financial statement analysis. Financial statement analysis is used predominantly by lenders to determine how healthy an existing business is

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Fake Quiz answers

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  1. Fake Quiz answers Chapter 4

  2. Purpose of financial statement analysis • Financial statement analysis is used predominantly by lenders to determine how healthy an existing business is • Also used externally by potential investors to determine if they will invest in the firm (e.g., through purchase of stock) • Generate information that can be used by the business itself

  3. How can entrepreneurs use financial statement analysis? • Plan for future working capital needs • Determine inventory through-put • Determine ability to turn credit sales into cash • Balance current assets with current liabilities

  4. Three types of analysis • Vertical – shows % of FS item relative to Total Assets or Total Sales • Horizontal – shows changes over different time horizons for same FS item • Ratio – determines liquidity, operating efficiency, and profitability

  5. COGS and Turnover • $30,000 + $50,000 / 2 = $40,000 • $160,000/$40,000 = 4 • 365/4 = 91 days in stock

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