Financial Statement Analysis Flashcards
7 cards from real CPFM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Statement Analysis flashcards as text
Vertical analysis expresses each line item as a percentage of which base?
Answer: Total revenue or total assets
Vertical analysis states items as a percentage of a base such as total revenue or total assets.
Inventory turnover is calculated as cost of goods sold divided by:
Answer: Average inventory
Inventory turnover equals cost of goods sold divided by average inventory.
A high days-sales-outstanding (DSO) figure generally indicates:
Answer: Slow collection of receivables
A high DSO means the company takes longer to collect its receivables.
Which ratio measures a company's ability to pay interest on outstanding debt?
Answer: Times interest earned
Times interest earned (interest coverage) measures the ability to cover interest expense from earnings.
Working capital is defined as:
Answer: Current assets minus current liabilities
Working capital equals current assets minus current liabilities.
The DuPont analysis breaks ROE into profit margin, asset turnover, and:
Answer: Equity multiplier
DuPont decomposes ROE into profit margin, asset turnover, and the equity multiplier (leverage).
Which statement explains changes in a company's cash position during a period?
Answer: Statement of cash flows
The statement of cash flows reports cash inflows and outflows across operating, investing, and financing activities.