
Financial statements help in calculating the value of the firm and also show the position of the business. Financial statement includes three statements:
1. The
2. The income statement.
3.
To evaluate:
The performance of the company from the given financial statement.

Answer to Problem 98.1C
Ratio analysis
Particular | 2018 | 2019 |
1.14 | 1.126 | |
2.45 | 2.47 | |
0.33 | 0.32 | |
0.71 | 0.71 | |
0.0017 | 0.031 | |
0.072 | 0.033 | |
0.015 | 0.07 |
The increase in the sales volume of the company leads to an increased profit. The ratio analysis enables the investors and shareholders to view the company’s sound financial position.
Analysis of the company as per the given statement:
The Company increases profit from 2017 to 2019 is $47968.
The Company increases the sale from 2017 to 2019 is $119747.
The Company increases the operating profit also from 2017 to 2019 $125047.
The Company increases the Earning per share from $0.109 per share to 0.98 per share.
The Company increases the assets from 2017 to 2019 is $329878.
Explanation of Solution
For 2018
For 2019
The five steps to evaluate the financial statement are:
- Determining the economic characteristics of the industry.
- Assessing the strategies of the company.
- Assessing the quality of the firm’s financial statements.
- Analyzing the current profitability ratio and risk ratio.
- Compute the value of the firm for its shareholders.
The increase in the sales volume of the company leads to an increased profit. The ratio analysis enables the investors and shareholders to view the company’s sound financial position.
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Chapter 12 Solutions
Cornerstones of Financial Accounting
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