part a.) ANSWER THE FOLLOWING: ASAP
? What can we do with the calculation of the return on assets — profitability and an ability to determine the strengths and weaknesses of a companyâ€™s business operations
? What can we do with the calculation of the return on common equity — how does company borrowing (leverage) affect profitability
? How to determine the short-term and long-term liquidity risks
? What information can get capture from the cash flow statement to assess solvency risk
? How conflicts of interest can affect the quality or reliability of financial statements
? The value of a cause of change analysis — how changing something can affect different levels of performance. For example, how passage of a particular law or a tax change affects operating profit or net earnings.
? How common-size statements can identify changes in profitability and costs
? To calculate a return on assets typically requires that one adjust profits for after-tax interest expenses or atypical events (such as a sale of a business operation or a sale of property or other asset).
? The return on assets and how it drives the level of competitiveness.
? Why is it that we subtract preferred dividends from the return on common equity calculation.
? How credit risk is assessed and how it is measured in the short-term and long-term