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You need to analyze a firm's performance in relation to its peers. You can do this either by comparing the firms' balance sheets and income statements, or by comparing the firms' ratios. If you only had time to use one means of comparison which method would you use and why?

The political cost hypothesis dictates that managers will use accounting policies that a. Report the future earnings as current earnings. O b. Report the future earnings as past earnings. Oc. Report the past earnings as current earnings. O d. Report the current earnings as future earnings.

when a client notices a discrepancy between annual profits calculated by the accountant versus your economic profit analysis. Use an example to illustrate to the client how a profit measure can differ between a cash-based profit (accounting) versus an economic measure of performance? Which should the client focus on and why?

TRUE OR FALSE: Read each sentence carefully and determine whether the statement True or False. Write your answers in the space provided before the number. 1. Financial statement analysis uses computational and analytical techniques to evaluate the company's risks, performance, financial health, and future prospects with the objective of making economic decisions. 2. Return on asset is an operational efficiency ratio. 3. Profitability ratios measure the ability of the company's assets to generate sales. 4. Gross profit margin provides an indication of the company's average pricing policy 5. Given equal gross profit margin, the company with the lower operating income margin has higher operating expenses as a percentage of sales and has leaner operations. Written Works Below are the comparative Statement of Comprehensive Income & Statement of Financial Position of Ellane Company & Lanie Company: Statement of Comprehensive Income Ellane Company 2013 Melanie Company 2014 2013 2014 Net Sales…

A company can use comparisons of its financial data to the data of other companies and industry averages to evaluate its position. Group of answer choices True False

Please see below. Be sure to include an explanation as well. If you were a user of financial statements, what type of ratio/analysis do you think would be most important to use to make sure the company you have invested in is doing well?  What would you look for in a company that you were considering investing in?

Using the data in the following table for a number of firms in the same industry, dothe following:•a. Compute the total asset turnover, the net profit margin, the equity multiplier, andthe return on equity for each firm.b. Evaluate each firm’s performance by comparing the firms with one another.Which firm or firms appear to be having problems? What corrective actionwould you suggest the poorer performing firms take? Finally, what additional data would you want to have on hand when conducting youranalyses?Firm (in  million Dollars A B C D Sales $20 $10 $15 $25 Net Income after sales 3 0.5 2.25 3 Total Assets 15 7.5 15 24 Stockholders’ Equity 10 5 14 10

Your Task… Using your assigned financial statements calculate the required ratios below Indicate if the change from year to year is favorable or unfavorable. All values should be accurate to at least two decimal places. The expectation is to submit a professional report free of grammar and spelling errors and easy to read. Think of this as a menu you would be handing to a customer.  All calculations are to be represented. Analysis of Profitability Gross Profit Ratio Operating Profit Ratio Net Profit Ratio Sales to Total Assets Ratio Return on Total Assets Return on Equity Earnings Per Share

Which method might you prefer if you were a manager and your bonus was tied to a financial performance measure such as net income?(FIFO, LIFO, OR WEIGHTED AVERAGE)

To evaluate a company’s performance, investors need a benchmark to which they can compare its financial ratios. What are some of the problems associated with these comparisons?

Suppose you are trying to decide whether to invest in a company that generates a high expected ROE, and you want to conduct further analysis on the company’s performance. If you wanted to conduct a comparative analysis for the current year, you would: Compare the firm’s financial ratios for the current year with its ratios in previous years   Compare the firm’s financial ratios with other firms in the industry for the current year     You decide also to conduct a qualitative analysis based on the factors summarized by the American Association of Individual Investors (AAII). According to your understanding, a company with one key product is considered to be    risky than companies with a wide range of products.   The American Association of Individual Investors (AAII) has identified several qualitative factors that should also be considered when evaluating a company’s likely future financial performance. Consider the scenario and indicate how you would expect the…

How is the standard deviation of returns calculated?

A trend analysis indicates a firm's performance ____.  a.over time  b.more accurately than any other type of analysis  c.at one given point in time  d.without relying on financial ratios

. Explain the factors used in the formula, how the ratio assists the investor in evaluating a company’s performance, and whether it assesses liquidity, solvency, or profitability.

Explain why the acid-test ratio is a better measure of financial health than the current ratio.