Module 2 - Financial Statements and Horizontal Analysis

What is the primary purpose of financial statements?

• To record financial activities for a specific period

• To provide entertainment to stakeholders

• To predict future market trends

• To serve as a marketing tool

What is a fiscal year?

• A year that is always the same as the calendar year

• A 12-month cycle starting in any quarter of the year

• A year that is shorter than 12 months

• A year that starts on January 1 and ends on December 31

Which financial statement shows a company's assets, liabilities, and equity?

• Statement of Income and Expenses

• Statement of Owner's Equity

• Cash Flow Statement

• Statement of Financial Position

What does the Statement of Income and Expenses summarize?

• The company's financial performance over a specific period

• The company's historical costs

• The company's cash inflows and outflows

• The company's ownership structure

What is the equation represented in the Statement of Financial Position?

• Assets = Equity - Liabilities

• Assets + Liabilities = Equity

• Assets = Liabilities + Equity

• Assets = Liabilities + Revenue

What does the Cash Flow Statement track?

• The company's employee expenses

• The company's market share

• The sources and uses of cash during a period

• The company's total revenue

Which of the following is NOT a component of the Statement of Owner's Equity?

• Preferred Stock

• Operating Income

• Common Stock

• Retained Earnings

What does EPS stand for in financial terms?

• Earnings per Sale

• Earnings per Share

• Equity per Share

• Expenses per Share

What is the main focus of liquidity analysis in financial statements?

• The company's profitability

• The company's ability to meet short-term obligations

• The company's market position

• The company's historical performance

What does the term 'cumulative' refer to in the context of the Statement of Financial Position?

• The total revenue generated over time

• The growth of assets over time

• The total liabilities at a specific point

• The total expenses incurred over time