Financial Accounting Final...

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What is a comparative balance sheet?

Shows a company's financial position at multiple different points in time (to compare)

Give classifications of cash flow?

Operating activities, investing activities, financing activties

Where do companies report noncash activities?

either in separate schedule (bottom of statement) or separate note to the financial statements

What is the purpose of financial analysis?

helps people decide if a company is doing good and if its a good idea to invest in or do business with

When analyzing financial statements, what are the three major characteristics?

profitability, liquidity, and solvency

What are the three basic tools of analysis?

horizontal analysis, vertical analysis, ratio analysis

What is liquidity?

how easily the company can pay short term bills

What is profitability?

measures income of operating success for given period of time

What is solvency?

measures ability company to survive over a long period of time

What are the three comparative analyses?

Intracompany, intercompany, industry average

What is the most important activity for a company out of the three? Why?

operating activities because it shows how much cash a company generates