Study Questions
4–1. Analyzing a firm’s financial condition using its financial statements can be likened to performing a physical examination. A physician assesses a patient’s health by checking temperature, blood pressure, and other vital signs. What are the vital signs used by the analyst when performing a financial analysis that is analogous to the physical exam, and what does the analyst hope to learn?
4–2. What are common-size financial statements, how are they constructed, and why are they useful to the financial analyst?
4–3. List and describe the five basic questions used to discuss financial statement analysis.
4–4. What does the term liquidity mean in the context of a firm’s financial condition, and what financial ratios can ...
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