FINANCIAL STATEMENT ANALYSIS INTRODUCTION ACTUAL EXAM PAPER 2026 QUESTIONS WITH SOLUTIONS VERIFIED ANSWERS

FINANCIAL STATEMENT ANALYSIS
INTRODUCTION ACTUAL EXAM PAPER
2026 QUESTIONS WITH SOLUTIONS
VERIFIED ANSWERS

●● Financial Ratios.
Answer: Relationships between financial statement amounts.


●● Common Size Financial Statements.
Answer: Creating useful #'s by dividing all financial statement #'s by
total sales for the year.


●● The prediction of how a business will perform in the future.
Answer: When analyzing financial statements, prognosis is


●● Financial ratios.
Answer: Relationships between financial statement amounts are called


●● Investing Purposes.
Answer: External users of financial statements use financial statement
analysis for

, ●● Both past values and values for other firms in the same industry.
Answer: Financial statement analysis is greatly enhanced when financial
ratios are compared with


●● The identification of where a business has problems.
Answer: When analyzing financial statements, diagnosis is


●● Debt Ratios.
Answer: Total liabilities divided by total assets. Debt ratio represents the
portion of borrowed funds used to acquire the company's assets. 50% is
average market median. DR=Total Liabilities/Total Assets


●● Liquidity.
Answer: A companies ability to pay its debts in the short run.


●● Current Ratio.
Answer: A comparison of current assets with current liabilities.
CR= total current assets/total current liabilities.
*Historically, ratios below 2 suggest the possibility of liquidity
problems.


●● Return on Sales.