Answer Happy

Please answer these essay questions (your own answers
not from answers)
List and describe the phases of the Financial Statement Analysis
Framework and discuss why the last stage is needed. (Chapter 1,
Section 4, p29)
Discuss four qualitative characteristics of financial reports
(under IFRS) in detail. (Chapter 2, Section 5.2)
What is the “Going Concern” assumption and why is it in an
important underlying assumption in financial statements?
(Chapter 2, Section 5.4.1).
Explain what is meant by “Accrual Accounting” and
“Cash-based Accounting”, giving an example of a transaction
and its handling under the two different accounting systems.
(Chapter 2, Section 5.4.1 and in class examples).
Explain what is meant by a company’s liquidity and a
company’s solvency. Which ratios correspond to each
discussion? (Chapter 6, Sections 2 & 4)
State two activity ratios, giving their formulae and explain how
they are used. Give examples where appropriate. (Chapter 6, Section
4.2)
Explain how an increase in financial leverage can improve
return-on- equity. (Chapter 6, Section 4.4, p. 326 & in-class
example)
Explain why DuPont analysis is useful when assessing firm
performance. (Chapter 6, Section 4.6.2).
During financial analysis, an analyst must compare the computed
ratios to industry norms. Explain why industry ratios are important
in financial analysis. (Chapter 6, Section 4.1)
Explain the distinction between ratio computation and financial
analysis (computation vs. analysis). Give examples where needed.
(Chapter 6, Section 2.2)
How might the cash cycle differ among a service company, a
merchandising company and a manufacturing company? Give examples
where appropriate. (Chapter 6, Section 4.2.1).