WGU D366 STUDY QUESTIONS
SECTION 1 AND ANSWERS
, A firm is using estimates of what its share value is in order to make decisions about
whether to buy, sell, or hold onto its equity securities.
Which state of financial statement analysis is the firm involved in? - ANSWERSStep 6:
Value the firm
During this step, the value of the firm is determined, often along with its intrinsic value.
This includes the intrinsic value and the selling prices for existing assets of the firm at a
given time.
As part of its financial statement analysis, a company is estimating what its likely future
profitability, growth, and risk will be, and, in turn, the likely future returns from investing
in the company.
Which step of financial statement analysis is the firm involved in? - ANSWERSStep 5:
Preparing forecasted financial statements
As part of its financial statement analysis, a company is evaluating the business model
the firm is executing to be different and successful in its industry.
Which step of financial statement analysis is the firm involved in? - ANSWERSStep 2:
Identifying the strategies the firm will use to gain and keep a competitive advantage
Step 2 involves asking questions about the business model, current competitive
advantages, sustainability of that advantage, and if products are meeting needs.
As part of its financial statement analysis, a company is reviewing whether its profit
margin is increasing or decreasing over time.
Which step of financial statement analysis is the firm involved in? - ANSWERSStep 4:
Using financial statements to analyze current profitability, growth, and risk
Step 4 asks about the rate of return from assets, rate of return for common equity
shareholders, and whether profit margin is increasing or decreasing over time.
A potential investor is identifying whether or not the company belongs to an industry that
includes a large number of firms selling the same product or only a small number of
firms selling unique products.
Which step of financial statement analysis is the potential investor involved in? -
ANSWERSStep 1: Identifying the economic characteristics and competitive dynamics of
the industry in which the firm participates.
Step 1 involves asking about dynamic forces driving competition and how technological
change impacts competitive advantage.
As part of its financial statement analysis, an auditor is trying to determine whether its
client has selected a specific certain accounting method simply to make the firm appear
more profitable or less risky than economic conditions otherwise suggest.
SECTION 1 AND ANSWERS
, A firm is using estimates of what its share value is in order to make decisions about
whether to buy, sell, or hold onto its equity securities.
Which state of financial statement analysis is the firm involved in? - ANSWERSStep 6:
Value the firm
During this step, the value of the firm is determined, often along with its intrinsic value.
This includes the intrinsic value and the selling prices for existing assets of the firm at a
given time.
As part of its financial statement analysis, a company is estimating what its likely future
profitability, growth, and risk will be, and, in turn, the likely future returns from investing
in the company.
Which step of financial statement analysis is the firm involved in? - ANSWERSStep 5:
Preparing forecasted financial statements
As part of its financial statement analysis, a company is evaluating the business model
the firm is executing to be different and successful in its industry.
Which step of financial statement analysis is the firm involved in? - ANSWERSStep 2:
Identifying the strategies the firm will use to gain and keep a competitive advantage
Step 2 involves asking questions about the business model, current competitive
advantages, sustainability of that advantage, and if products are meeting needs.
As part of its financial statement analysis, a company is reviewing whether its profit
margin is increasing or decreasing over time.
Which step of financial statement analysis is the firm involved in? - ANSWERSStep 4:
Using financial statements to analyze current profitability, growth, and risk
Step 4 asks about the rate of return from assets, rate of return for common equity
shareholders, and whether profit margin is increasing or decreasing over time.
A potential investor is identifying whether or not the company belongs to an industry that
includes a large number of firms selling the same product or only a small number of
firms selling unique products.
Which step of financial statement analysis is the potential investor involved in? -
ANSWERSStep 1: Identifying the economic characteristics and competitive dynamics of
the industry in which the firm participates.
Step 1 involves asking about dynamic forces driving competition and how technological
change impacts competitive advantage.
As part of its financial statement analysis, an auditor is trying to determine whether its
client has selected a specific certain accounting method simply to make the firm appear
more profitable or less risky than economic conditions otherwise suggest.
