ACCT 2102 Test 3 Questions and Answers | Latest Version | 2024/2025 | Rated A+
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Course
ACCT 2102
Institution
ACCT 2102
ACCT 2102 Test 3 Questions and
Answers | Latest Version | 2024/2025 |
Rated A+
What is a financial statement analysis?
Financial statement analysis involves evaluating a company’s financial statements to assess
its performance and make informed decisions.
Define "ratio analysis."
R...
ACCT 2102 Test 3 Questions and
Answers | Latest Version | 2024/2025 |
Rated A+
What is a financial statement analysis?
✔✔ Financial statement analysis involves evaluating a company’s financial statements to assess
its performance and make informed decisions.
Define "ratio analysis."
✔✔ Ratio analysis is a quantitative method used to compare financial data and assess a
company's financial health through various ratios.
What does the term "current ratio" measure?
✔✔ The current ratio measures a company’s ability to pay short-term obligations with its current
assets.
What is the purpose of the quick ratio?
✔✔ The quick ratio assesses a company's ability to meet its short-term liabilities with its most
liquid assets, excluding inventory.
1
, Explain what is meant by "debt-to-equity ratio."
✔✔ The debt-to-equity ratio indicates the relative proportion of shareholders' equity and debt
used to finance a company's assets.
What does "return on assets" (ROA) indicate?
✔✔ Return on assets (ROA) measures how effectively a company utilizes its assets to generate
profit.
Define "price-to-earnings ratio" (P/E ratio).
✔✔ The price-to-earnings ratio (P/E ratio) is a valuation metric that compares a company's
current share price to its earnings per share.
What is the significance of trend analysis?
✔✔ Trend analysis is used to evaluate financial data over multiple periods to identify patterns
and make forecasts about future performance.
Explain the term "horizontal analysis."
✔✔ Horizontal analysis involves comparing historical financial data over time to identify growth
trends and patterns.
2
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