Activity 2 - Financial Statement Analysis

JERILINE A. RIAN 10/10/2021

BSBA-3 0M MS. ABAD

A. What is benchmarking? How is it important for a firm to have

a benchmark when analyzing its financial statements?

Benchmarking plays an important criterion is thus a crucial procedure to follow. Clearly,

the likely financial performance and implications of developing and/or adopting a brand-new
product idea are the key factors that require to be taken under consideration. And it’s
important for a firm to own a benchmark when analyzing financial statements as internal
benchmarks are particularly useful in evaluating both unique and hybrid job titles that external
benchmarks don’t exist.

B. Current ratio is usually used to assess the firm’s overall

liquidity however, what circumstances would the quick ratio
be preferred over it?

Liquidity ratios and leverage as employed by Greenway et al (2002) are other measures of
monetary constraints. According to my research in some useful sites the liquidity ratio is
defined as a firm’s current assets minus its short-term debt over total assets; the leverage ratio,
as a firm’s short-term debt over current assets. This increase is very noticeable within the
calculation of this Current Ratio lending to a result However, both numbers are still considered
low, because the commonly acceptable during a certain current ratio.

C. Explain why balance sheet accounts are generally “averaged”

and income statement figures are just lifted from the income
statement when using them as factors in a particular financial
statement ratio?

For the reason that adjusts sheet, is vital to begin off by looking at the adjust sheet by
category. Current resources and non-current resources on the cleared out. Current liabilities,
non-current liabilities, and value on the proper. Current resources are cash and other resources
that are anticipated to be changed over to cash inside a year. Non-current resources are longer-
term ventures that cannot be changed over into cash rapidly. Current liabilities are sums due to
be paid to leasers within twelve months. Non-current liabilities are sums owed that are to be
paid after the period of one year. Value on the adjust sheet is the book esteem of the
shareholder capital. That’s how the adjust sheet works on a conceptual level whereas the wage
explanation, which depicts the financial performance of the company, is additionally portrayed
within the components of the budgetary articulations. Wage and costs from standard exercises
are recognized as the most components of such an explanation, which when coordinated result.
 D. How do the DuPont technique help the firm’s managers to
further analyze its returns?
As characterized by google looked, DuPont investigation is utilized to assess the component parts of a
company's return on equity (ROE). So to interpret DuPont Investigation could be a helpful and
supportive apparatus that makes a difference a speculator sees at the more nitty-gritty angles of a
company's budgetary wellbeing and offer assistance to them to make more educated venture choices.
The DuPont framework is imperative since it gives a total, by and a large picture of any company's
money-related wellbeing and execution, as compared to the common and constrained value valuation
tools. DuPont Investigation may be a vital portion of the Budgetary and Operational use, without which
DuPont investigation can't allow precise comes about.