BACHELOR OF BUSINESS ADMINISTRATION

BUSINESS ADMINISTRATION

FINANCIAL ACCOUNTING

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

Which process explains that financial statements are analysed and the results of the analysis are used as a guidance to make decision?

A	Summarizing
B	Interpreting
C	Recording
D	Classifying

Explanation:

Detailed explanation-1: -Financial statement analysis is the process of analyzing a company’s financial statements for decision-making purposes. External stakeholders use it to understand the overall health of an organization and to evaluate financial performance and business value.

Detailed explanation-2: -Financial Statement Analysis takes the raw financial information from the financial statements and turns it into usable information the can be used to make decisions. The three types of analysis are horizontal analysis, vertical analysis, and ratio analysis.

Detailed explanation-3: -What are the five methods of financial statement analysis? There are five commonplace approaches to financial statement analysis: horizontal analysis, vertical analysis, ratio analysis, trend analysis and cost-volume profit analysis. Each technique allows the building of a more detailed and nuanced financial profile.

Detailed explanation-4: -Answer and Explanation: A vertical financial statement analysis expresses each item as a percentage of the base amount. This means that when analyzing the balance sheet, all accounts are divided to the total assets, as the base amount, in order to get the percentage.

There is 1 question to complete.