The evaluation of company performance and financial condition focuses solely on past performance.

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Market prospects are the ability to generate positive market expectations.

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An example of a guideline (or rule of thumb) for comparison is the 2:1 level for the current ratio and 1:1 level for the acid-test ratio.

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Three of the most common tools of financial analysis include horizontal analysis, vertical analysis, and ratio analysis.

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A trend percent is calculated by dividing the analysis period amount by the base period amount and multiplying the result by 100.

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Liquidity refers to the availability of resources to meet short-term cash requirements.

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The return on total assets can be calculated as profit margin times total asset turnover.

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