Which of the Following Are Possible Uses of Financial Analysis

question 59

Multiple Choice

Which of the following are possible uses of financial analysis?
I. By shareholders to assess future profitability and financial stability
II. By management for planning and control
III. By financial analysts to predict future share price
IV. By the government to estimate taxation payable

• A) II, III and IV
• B) III and IV
• C) I, II and III only
• D) I and IV

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Definitions:

Cost Equation

A formula used to predict the total costs of production, based on fixed and variable costs, as a function of activity levels.

Contribution Margin

The selling price per unit minus the variable cost per unit, which helps determine how much sales contribute to covering fixed costs and generating profit.

Variable Costs

These are costs that vary directly with the level of production or sales volume, such as raw materials and direct labor costs.

Fixed Costs

Costs that do not change with the level of goods or services produced within a certain range; such costs are incurred regardless of business activity levels.