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Business Accounting Financial Accounting: Information for Decisions

1. Introduction : Trend analysis is the horizontal analysis of any particular data given for different periods. Trend analysis helps a company to derive trends across several years which in turn enables an entity to measure its performance throughout the years. To determine : The trend percent for all components using 2012 as the base year The trend percent for comparative income statement using 2012 as the base year is as follows: The trend percent for comparative balance sheet using 2012 as the base year is as follows: Computation of trend percentages Taking 2012 as the base year, the trend percentage for sale can be computed with the following formula: Trend percentage= current year sales Base year sales ×100 The same formula shall be applied for every other item in the income statement for computation of trend percentages. For instance, for the computation of the trend percentage of the cost of goods sold shall be: Trend percentage= current year's cost of goods sold Base year cost of goods sold ×100 Computation of trend percentages Taking 2012 as the base year, the trend percentage for cash can be computed with the following formula: Trend percentage= current year cash balance Base year cash balance ×100 The same formula shall be applied for every other item in the balance sheet for computation of trend percentages. For instance, for computation of trend percentage of accounts receivable sold shall be: Trend percentage= current year's accounts receivable Base year's accounts receivable ×100 and so on b. Introduction : Trend analysis is the horizontal analysis of any particular data given for different periods. Trend analysis helps a company to derive trends across several years which in turn enables an entity to measure its performance throughout the years. To determine : Commenting on financial statements after analyzing the trend percents. Comments on financial statements; Sales are increasing at an extremely low rate, but the cost of goods and operating expenses are increasing at a faster rate. In 2018, sales are at 182.5% whereas the cost of goods stood at 212.6%, thus a sharp decline in net profits. Figures are showing business is having an excess of inventory and other assets are also declining thus results in more costs. In 2018, inventories are at 298.9% and cash is at just 65.2%, indicating the business is not having much liquid cash since it has applied a substantial portion of its cash to buy inventories. Liabilities are in good condition but overall business position is not good because it is operating at just 52.7% of net profits in comparison to base year 2012.

1. Introduction : Trend analysis is the horizontal analysis of any particular data given for different periods. Trend analysis helps a company to derive trends across several years which in turn enables an entity to measure its performance throughout the years. To determine : The trend percent for all components using 2012 as the base year The trend percent for comparative income statement using 2012 as the base year is as follows: The trend percent for comparative balance sheet using 2012 as the base year is as follows: Computation of trend percentages Taking 2012 as the base year, the trend percentage for sale can be computed with the following formula: Trend percentage= current year sales Base year sales ×100 The same formula shall be applied for every other item in the income statement for computation of trend percentages. For instance, for the computation of the trend percentage of the cost of goods sold shall be: Trend percentage= current year's cost of goods sold Base year cost of goods sold ×100 Computation of trend percentages Taking 2012 as the base year, the trend percentage for cash can be computed with the following formula: Trend percentage= current year cash balance Base year cash balance ×100 The same formula shall be applied for every other item in the balance sheet for computation of trend percentages. For instance, for computation of trend percentage of accounts receivable sold shall be: Trend percentage= current year's accounts receivable Base year's accounts receivable ×100 and so on b. Introduction : Trend analysis is the horizontal analysis of any particular data given for different periods. Trend analysis helps a company to derive trends across several years which in turn enables an entity to measure its performance throughout the years. To determine : Commenting on financial statements after analyzing the trend percents. Comments on financial statements; Sales are increasing at an extremely low rate, but the cost of goods and operating expenses are increasing at a faster rate. In 2018, sales are at 182.5% whereas the cost of goods stood at 212.6%, thus a sharp decline in net profits. Figures are showing business is having an excess of inventory and other assets are also declining thus results in more costs. In 2018, inventories are at 298.9% and cash is at just 65.2%, indicating the business is not having much liquid cash since it has applied a substantial portion of its cash to buy inventories. Liabilities are in good condition but overall business position is not good because it is operating at just 52.7% of net profits in comparison to base year 2012.

Solution Summary: The author explains that trend analysis helps a company to derive trends across several years which in turn enables an entity to measure its performance throughout the years.

Financial Accounting: Information for Decisions

Financial Accounting: Information for Decisions

9th Edition

ISBN: 9781260158809

Author: Wild, John

Publisher: MCGRAW-HILL HIGHER EDUCATION

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Chapter 13 Solutions

Financial Accounting: Information for Decisions

Ch. 13 - Explain the difference between financial reporting...Ch. 13 - Prob. 2DQ Ch. 13 - Prob. 3DQ Ch. 13 - Prob. 4DQ Ch. 13 - Prob. 5DQ Ch. 13 - Prob. 6DQ Ch. 13 - Prob. 7DQ Ch. 13 - Prob. 8DQ Ch. 13 - Prob. 9DQ Ch. 13 - Prob. 10DQ

Ch. 13 - Prob. 11DQ Ch. 13 - Prob. 12DQ Ch. 13 - Prob. 13DQ Ch. 13 - Prob. 14DQ Ch. 13 - Prob. 15DQ Ch. 13 - Prob. 16DQ Ch. 13 - Prob. 17DQ Ch. 13 - Prob. 1QS Ch. 13 - Prob. 2QS Ch. 13 - Prob. 3QS Ch. 13 - Prob. 4QS Ch. 13 - Prob. 5QS Ch. 13 - Prob. 6QS Ch. 13 - Prob. 7QS Ch. 13 - Prob. 8QS Ch. 13 - Which of the following gains or losses would...Ch. 13 - Prob. 1E Ch. 13 - Prob. 2E Ch. 13 - Prob. 3E Ch. 13 - Prob. 4E Ch. 13 - Prob. 5E Ch. 13 - Prob. 6E Ch. 13 - Prob. 7E Ch. 13 - Prob. 10E Ch. 13 - Prob. 12E Ch. 13 - Prob. 13E Ch. 13 - Prob. 14E Ch. 13 - Prob. 15E Ch. 13 - Prob. 16E Ch. 13 - Prob. 1PSA Ch. 13 - Prob. 2PSA Ch. 13 - Prob. 3PSA Ch. 13 - Prob. 5PSA Ch. 13 - Prob. 6PSA Ch. 13 - Selected comparative financial statements of...Ch. 13 - Prob. 2PSB Ch. 13 - Prob. 3PSB Ch. 13 - Prob. 5PSB Ch. 13 - Prob. 6PSB Ch. 13 - Prob. 13SP Ch. 13 - Prob. 2FSA Ch. 13 - Prob. 3FSA Ch. 13 - Prob. 1BTN Ch. 13 - Prob. 5BTN

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