money statement examination is the process of reviewing and evaluating a enterprise’s financial statements (such as the statement of financial position or profit and loss statement), thereby gaining an understanding of the economic well-being of the enterprise and enabling more effective decision making. Financial statements record financial data; however, this information must be evaluated through money statement examination to become more useful to investors, shareholders, managers and other interested parties.In ratio examination, line items from one money statement are compared with line items from another. For example, many analysts like to know how many times a enterprise can pay off debt with current earnings. Analysts can do this by dividing debt, which comes from the statement of financial position, by net earnings, which comes from the earnings statement. Likewise, return on holdings (ROA) and the return on equity (ROE) compare enterprise net earnings found on the earnings statement with holdings and stockholders’ equity as found on the statement of financial position.
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