Степа и Егор

What type of decisions require the analysis of financial statements?

• Hiring new employees and market segmentation

• Budget allocation and expense reimbursement

• Investment in new projects and evaluating creditworthiness

• Office space planning and social media marketing

Why do analysts use financial ratios rather than absolute numbers?

• Ratios simplify complex data for comparison; example: debt-to-equity ratio

• Ratios allow companies to reduce expenses; example: liquidity ratio

• Ratios are a standard accounting requirement; example: operating cash flow ratio

• Ratios allow businesses to avoid taxes; example: interest coverage ratio

What comparisons should be considered within an industry besides comparing a company's performance to the total industry?

• Peer companies of similar size and profitability

• Unrelated industries for cross-sector growth

• Startups and unlisted companies

• Companies in different geographic regions

How might a jewelry store and a grocery store differ in terms of asset turnover and profit margin? Would you expect their return on total assets to differ assuming equal business risk?

• Jewelry stores have higher asset turnover; grocery stores have lower profit margins

• Jewelry stores have lower asset turnover; grocery stores have lower profit margins

• Jewelry stores have higher profit margins and lower asset turnover

• Grocery stores have higher profit margins and higher asset turnover

What are the components of business risk, and how do they affect the variability of operating earnings (EBIT)?

• Business risk includes operational efficiency, taxes, and legal issues

• Business risk involves sales volume, pricing power, and input cost fluctuations

• Business risk refers to industry trends and advertising expenses

• Business risk includes labor costs, capital expenditure, and global markets

Which company would you expect to have greater business risk: a steel company or a retail food chain?

• Steel companies have lower business risk due to stable global demand

• Steel companies face higher business risk due to capital intensity and cyclical demand

• Retail food chains face higher business risk due to volatile pricing in commodities

• Retail food chains face lower business risk due to high cash flow

Should you be concerned with a firm's business risk when examining its financial structure?

• Yes, because business risk affects operational efficiency

• No, because business risk only impacts smaller firms

• Yes, because business risk impacts the firm's ability to cover debt

• No, because business risk is unrelated to financial structure

How might a cash flow ratio differ from a proportion of debt ratio? If these ratios differ, which should you follow?

• Follow the debt ratio as it reflects long-term solvency

• Follow the cash flow ratio, as it reveals short-term liquidity

• Ignore both ratios and analyze net income trends

• Follow both ratios equally for a complete picture

Why is the analysis of growth potential important to the common stockholder and the debt investor?

• Stockholders are concerned about dividends; debt investors focus on loan repayment

• Stockholders want stock price appreciation; debt investors want stable interest payments

• Stockholders rely on short-term profits; debt investors want quick returns

• Stockholders prefer stable industries; debt investors seek higher risk

What are the general factors that determine the rate of growth of any economic unit?

• Political factors, inflation rates, and population growth

• Market demand, technological innovation, and capital reinvestment

• Currency exchange rates, transportation, and legal factors

• Tax policies, investment options, and real estate development