Discuss the limitations that affect financial statement analysis.
What will be an ideal response?
Answers will vary
The results of financial statement analysis can be difficult to interpret and explain because of differences among industries, changing economic conditions, and the varying accounting principles and estimates made by different companies. Financial statement analysis is useful in giving an overview of a company. Studying a company's financial statements over a period of years and comparing the results to other companies in the same industry can help to reduce the ambiguity associated with the analysis results.
You might also like to view...
Exhibit 15-6 On January 1, 2016, 50 executives were given a performance-based share option plan that would award them with a maximum of 300 shares of $10 par common stock for $20 a share. On the grant date, the fair value of an option was $16.50. The number of options that will vest depends on the size of the annual average increase in sales over the next three years according to the following
table: Annual Average Increase in Sales No. of Shares Greater than 5% 50 Greater than 10% 150 Greater than 15% 300 On the grant date, the company estimates the annual average sales increase will be 14%. ? Refer to Exhibit 15-6. In 2017, the company determined that the actual annual average increase was 16%. The compensation expense for 2017 will be A) $123,750 B) $247,500 C) $82,500 D) $55,000
When par stock is issued at a price below par, the amount below par is called a(n)
a. stated value; b. expense; c. discount; d. market value; e. dividend
The common purpose of audit standards created by the various authorities is to provide reasonable assurance that audits are conducted in a quality manner
a. True b. False Indicate whether the statement is true or false
Which element of the marketing mix includes the distribution activities necessary to get the product in the hands of the customer?
A. price B. position C. place D. promotion E. product