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Business analysis is the evaluation of a companys prospects and risks for the purpose of making
business decisions.
Objectives: aids in making informed decisions by helping structure the decision task through an
evaluation of a companys business environment, its strategies, and its financial position and
performance.
1-2. Explain the claim: Financial statement analysis is an integral part of
business analysis.
1-3. Describe the different types of business analysis. Identify the category
of users of financial statements that applies to each different type of
business analysis.
1-4. What are the main differences between credit analysis and equity
analysis? How do these impact the financial statement information that is
important for each type of analysis?
1-9. Identify at least five different internal and external users of financial
statements.
1-10. Identify and discuss the four major activities of a business enterprise.
1-16. Identify and describe at least four categories of financial analysis tools.
1-19. Compare the absolute amount of change with the percent change as
an indicator of change. Which is better for analysis?
1-28. What is meant by time value of money? Explain the role of this
concept in valuation.
1-29. Explain the following claim: While we theoretically use the effective
interest rate to compute a bonds present value, in practice it is the other
way around.
1-30. What is amiss with the claim: The value of a stock is the discounted
value of expected future cash flows?
1-31. Identify and describe a technique to compute equity value only using
accounting variables.
1-32. Explain how the efficient market hypothesis (EMH) depicts the reaction
of market prices to financial and other data.