The primary purpose of financial statement analysis is to assess the ___ of a business.

Financial health

True or False: Liquidity analysis assesses a company's ability to pay its long-term debts and obligations.

False. Liquidity analysis assesses a company's ability to repay short-term debts and cover expenses.

Fill in the blank: Horizontal analysis examines changes in financial statement figures over ___ and ___ periods.

Time and different

What type of financial analysis expresses relationships as percentages and is used for a specific accounting period?

Vertical analysis

True or False: Variance analysis involves comparing actual financial outcomes with budgeted figures to identify discrepancies.

True

Fill in the blank: Ratio analysis evaluates relationships between various items in financial statements to assess a company's ___ performance.

Financial

What analysis tool provides a way to analyze financial statements by converting figures into percentages of a common base?

Common Size Statement

True or False: The cash flow statement is not important for assessing a company's liquidity.

False. The cash flow statement is crucial for understanding a company's liquidity.

Fill in the blank: Profitability analysis measures the balance between ___ and ___ over a given period.

Costs and revenues

What does valuation analysis assess regarding a business?

The current value of a business, useful for scenarios like mergers and acquisitions.