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A Manager's Guide to Financial Analysis by Eliot H. Sherman

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Answers to Quick Quiz Questions

QUICK QUIZ 1–1

The financial analyst is responsible for:

(a)  Managing the recording and reporting of transactions.

(b)  Implementing the financial management policies of the company.

(c)  Directing the functions of the accounting staff.

(d)  Assessing the impact of management decisions.

Answer: d.

The financial analyst diagnoses the financial effects of management’s decisions.

QUICK QUIZ 2–1

Can a company operate if its liabilities exceed its assets—that is, if its equity is negative?

Answer:

Yes, provided it can pay its obligations to the satisfaction of its creditors. Amazon operated this way for several years before (and even after) it began to make profits.

QUICK QUIZ 3–1

ABC Company has $5,000,000 ...

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