Analysis of Financial Statements

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Horizontal Analysis
- aka base-year analysis; a technique for evaluating a series of financial statement data over a period of time

Vertical Analysis
- aka common-size analysis; a technique for evaluating financial statement data that expresses each item as a percentage of base amounts.

Ratio Analysis

1. Liquidity Ratios
- measure the ability of an entity to pay currently maturing obligation and meet unexpected cash needs

2. Profitability Ratios
- measure the ability of an entity to earn income over a period of time

3. Solvency Ratios
- measure the ability of an entity to survive over a long period of time

4. Leverage Ratios
- assess the ability of a company to meet its financial obligations

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Frias, S. (2016) ABM 2

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