You were just hired as an analyst for a credit rating agency that evaluates publically listed companies in the United States. The company already has some Data Analytic tools that it uses to evaluate financial statements and determine which companies have higher risks and which companies are growing quickly. The company uses these analytics to provide ratings that will allow lenders to set interest rates and determine whether to lend money in the first place.

Part 1) Think about ways that you might analyze data from a financial statement. You could use a horizontal analysis to view trends over time, or a vertical analysis to show account proportions, or ratios to analyze relationships.

1. Create a new word processing document and name the file.

2. Use what you know about financial statement analysis to generate three different metrics for evaluating financial performance. For example, if you wanted to evaluate a company's profit margin from one year to the next your question might be "Has (Company X's) gross margin increased in the last three years?" Type your three questions on your document.

3. Next to each question generate a hypothetical answer to the question to help you identify what your expected output would be. You may use some insight or intuition or search for industry averages to inform your hypothesis. For example, "Hypothesis: Apple Inc's gross margin has increased slightly in the past 3 years."

Answer rating: 100% (QA)

1 The file can be named Financial Statement Analysis 2 Use what you know about financial state... View the full answer