When analyzing projected financial statements, you should do which of the following: Group of answer choices...

When analyzing projected financial statements, you should do which of the following:

Group of answer choices

test the reasonableness of forecast assumptions

Use ratios and other analytical tools

perform a sensitivity analysis

all of the above

Solutions

Expert Solution

Ans.All of the above

Financial statement analysis refers to analysis of the financial ststements of an organization, mainly the three important financial ststements that is balance sheet ,income statement and cash flow ststement.In the case of projected financial statements as stated in the question ,one needs to keep in mind that the statements are only as good as the assumptions, so ensuring that the forecasts are reasonable is important.Various forecasting techniques used are regression analysis,learning curve analysis and expected value method.Ratio analysis is often intended to compare the various items that are described in said financial statemnts to get an idea regarding the firms profitability ,liquidity,and efficincy in operations.Sensitivity analysis or what if analysis is used to get an understanding of how changes in independent variable will affect the values of a dependent variable.

jeff jeffy answered 1 year ago

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