Question
Why is trend analysis useful in financial statement analysis?
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Answer
It shows multi-period movement relative to a base year.
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Question
What does DuPont decomposition isolate in ROE analysis?
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Answer
Whether ROE changed because of margin, turnover, or leverage.
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Question
How does horizontal analysis differ from vertical analysis?
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Answer
Horizontal measures period-over-period change; vertical shows each line as a percentage of a base.
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Question
Why does collecting accounts receivable usually leave the current ratio unchanged?
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Answer
Current assets change form, but total current assets and liabilities stay the same.
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