Question

Which of the following would be helpful to an analyst evaluating the performance of a firm?

1) Reviewing the annual reports of a company's suppliers, customers, and competitors.
2) Understanding the economic and political environment in which the company operates.
3) Preparing common-size financial statements and calculating key financial ratios for the company being evaluated.
4) All of the above.

Answer 1

To evaluate the performance of a firm, an analyst would find it helpful to review annual reports, understand the economic and political environment, and prepare financial statements and ratios.

Step-by-step explanation:

For an analyst evaluating the performance of a firm, all of the following options would be helpful:

1. Reviewing the annual reports of a company's suppliers, customers, and competitors provides insights into the external factors that may affect the firm's performance.
2. Understanding the economic and political environment in which the company operates helps in gauging the impact of macroeconomic factors on the firm's performance.
3. Preparing common-size financial statements and calculating key financial ratios for the company being evaluated allows for a quantitative assessment of the firm's financial health and performance.

Therefore, the correct answer is 4) All of the above.