Chapter 17, Problem 2APSA

To determine

1.

Introduction:

Current Ratio measures the ability to the company to meet its current liabilities out of its current assets. Current Assets when divided by Current liabilities give us Current Ratio. Current Ratio should be greater than 1. A current ratio less than 1 indicates difficulties in meeting it short term payments.

To determine:

The current ratios for the given years.

To determine

2.

Introduction:

An income statement data is expressed in common-size percent by dividing each component of the income statement with the net sales. This facilitates the comparison of the data across years and companies within the industry.

To determine:

The income statement data in the common-size percent

To determine

3.

Introduction:

Trend percents analysis means the representation of various components of Income statements and Balance sheets in percentage form instead of dollar value and this is done by selecting a base year.

To Calculate:

The trend percent of the given components using the base year as given

To determine

4.

Introduction:

Ratio and trend analysis are the common financial tools used by analyst to measure the company’s financial health and performance.

The common size Income statement are computed to compare the income statement of various years as a percentage of net sales. The trend percent Balance sheet is prepared by selecting a year as the base year and then it is prepared by dividing the value of each component by the value of that respective component of the base year. By comparing this data, a fair comparison of various years data can be easily made.

To determine:

Whether any significant inferences can be drawn from the ratios and percents computed above