Short Answer Questions 160. Explain the purpose of financial statement analysis for both external and internal users. 161. Identify and explain the four building blocks of financial statement...

Short Answer Questions

160. Explain the purpose of financial statement analysis for both external and internal users.

161. Identify and explain the four building blocks of financial statement analysis.

162. What are the four standards for comparisons in financial analysis? Give an example of each.

163. Identify and describe three common tools of financial statement analysis.

Analysis: Three common tools of financial statement analysis are: (1) horizontal analysis, which compares a company's financial condition and performance across time; (2) vertical analysis, which compares a company's financial condition and performance to a base amount; and (3) ratio analysis, which uses key relations between financial statement items.

164. What is the purpose of a good financial statement analysis report? What are the key components?