CFA Level I · CFA Level I Exam · Introduction to Financial Statement Analysis
Which of the following best describes the primary role of financial statement analysis for an equity analyst?
The role of financial statement analysis is to use reported financial information to evaluate a company's past performance and current financial position and to form expectations about its future. Auditing and preparing statements are tasks for auditors and management, not for the analyst.
- ATo audit the financial statements and certify their accuracy
- BTo use the information in financial reports to evaluate a company's past performance and financial position and to form expectations about its futureCorrect
- CTo prepare the financial statements in line with the accounting standards
Explanation
Financial statement analysis uses reported information to assess past performance and financial position and to project future performance, supporting decisions such as valuation. Auditing and preparing statements are the roles of auditors and management, not of the analyst.
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