Connect Access Card For Fundamental Accounting Principles
24th Edition
ISBN: 9781260158526
Author: John J Wild
Publisher: McGraw-Hill Education
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Chapter 17, Problem 4BTN
To determine
1. Introduction:
Analysis of Financial Statements
- Analysis of Financial Statements is a study of several key metrics of a company based on the data presented in its' financial statements with an objective to evaluate the financial health of a company.
- It is essential for investors, stakeholders, government bodies etc. to evaluate the key metrics of an entity in order to ensure that the company fulfills the going concern principle and displays financial stability.
The key metrics mentioned above include the following:
- Horizontal Analysis − Refers to comparison of the figures of the components of financial statements across the figures for the previous years to determine favorable or unfavorable trends
- Vertical analysis - Refers to comparison of the figures of the components of financial statements against each other in order to determine relative composition of the components in relation to the total
Meaning of horizontal and vertical analysis with examples
To determine
2. Introduction:
Ratio Analysis
- Ratio analysis is a study of several key metrics of a company based on the data presented in its' financial statements with an objective to evaluate the financial health of a company.
- It is essential for investors, stakeholders, government bodies etc. to evaluate the key metrics of an entity in order to ensure that the company fulfills the going concern principle and displays financial stability.
The key metrics mentioned above include the following:
- Equity Ratio − It is a measure of the total equity component out of the total capital employed by an entity that comprises of both debt and equity
- Return on Total Assets − A measure of the return earned by the shareholders on the total assets employed. It is an indicator of profitability in relation to the assets.
- Dividend Yield Ratio − It is a measure of the total dividend earned by the equity shareholder in relation to the shares held.
- Book Value per Share − It is a measure of the actual book value or
cost of the equity shares. It seeks to measure the actual price that the share is worth and the difference between market price and actual book value.
- Days' sales in inventory − A measure of the total outstanding collections for credit sales in terms of inventory. It is calculated to understand how many days the company holds inventory before selling it
- Accounts receivable turnover − A measure of the relation between the turnover and accounts receivable measured in number of times.
- Debt Equity Ratio − A Measure of the total debt used to leverage the business in relation to the percentage of equity.
- Times Interest earned Ratio − A measure of the total income and the total interest payments made by the business. It seeks to measure how much of the earnings can finance interest costs and at what multiple. The higher the ratio, the better.
- Gross Margin Ratio − A measure of the gross margin earned from the turnover for the reporting period.
- Acid Test Ratio − Also known as quick ratio, it seeks to measure the liquidity position of the business.
To Prepare:
Ratios relating to the following building blocks of financial analysis:
- Liquidity And Efficiency
- Solvency,
- Profitability,
- Market Prospects
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Chapter 17 Solutions
Connect Access Card For Fundamental Accounting Principles
Ch. 17 - Prob. 1DQCh. 17 - Prob. 2DQCh. 17 - Prob. 3DQCh. 17 - 4. What three factors would influence your...Ch. 17 - Prob. 5DQCh. 17 - Prob. 6DQCh. 17 - Prob. 7DQCh. 17 - Prob. 8DQCh. 17 - Prob. 9DQCh. 17 - Prob. 10DQ
Ch. 17 - What ratios would you compute to evaluate...Ch. 17 - Why would a company’s return on total assets be...Ch. 17 - 13. Where on the income statement does a company...Ch. 17 - Prob. 14DQCh. 17 - Prob. 15DQCh. 17 - Prob. 16DQCh. 17 - Prob. 17DQCh. 17 - Prob. 1QSCh. 17 - QS 17-2 Standard of comparison C2
Identify which...Ch. 17 - Prob. 3QSCh. 17 - Trend percents P1 Use the following information to...Ch. 17 - QS17-5 Common-size analysis P2
Refer to the...Ch. 17 - QS 17-6 Computing current ratio and acid-test...Ch. 17 - QS 17-7 Computing accounts receivable turnover and...Ch. 17 - QS 17-8 Computing inventory turnover and days'...Ch. 17 - QS17-9 Computing total asset turnover P3
Dundee...Ch. 17 - Prob. 10QSCh. 17 - Prob. 11QSCh. 17 - QS 17-12 Computing price-earnings ratio and...Ch. 17 - Prob. 13QSCh. 17 - Prob. 14QSCh. 17 - QS 17-15A Identifying unusual and/or infrequent...Ch. 17 - Exercise 17-1
Building blocks of analysis
Match...Ch. 17 - Prob. 2ECh. 17 - Prob. 3ECh. 17 - Prob. 4ECh. 17 - Prob. 5ECh. 17 - Prob. 6ECh. 17 - Prob. 7ECh. 17 - Prob. 8ECh. 17 - Prob. 9ECh. 17 - Prob. 10ECh. 17 - Exercise 17-11 Analyzing profitability P3 Q Refer...Ch. 17 - Prob. 12ECh. 17 - Prob. 13ECh. 17 - Prob. 14ECh. 17 - Prob. 15ECh. 17 - Exercise 17-16 Interpreting financial ratios A1 P3...Ch. 17 - Prob. 17ECh. 17 - Prob. 18ECh. 17 - Problem 17-1A Calculating and analyzing trend...Ch. 17 - Problem 17-2A Ratios, common-size statements, and...Ch. 17 - Problem 17-3A
Transactions, working capital, and...Ch. 17 - Problem 17-4A Calculating financial statement...Ch. 17 - Prob. 5APSACh. 17 - Prob. 6APSACh. 17 - Prob. 1BPSBCh. 17 - Prob. 2BPSBCh. 17 - Prob. 3BPSBCh. 17 - Prob. 4BPSBCh. 17 - Prob. 5BPSBCh. 17 - Prob. 6BPSBCh. 17 - SP 17 Use the following selected data from...Ch. 17 - Prob. 1AACh. 17 - Prob. 2AACh. 17 - Prob. 3AACh. 17 - BTN 17-1 Refer to Apple’s financial statements in...Ch. 17 - Prob. 2BTNCh. 17 - Prob. 3BTNCh. 17 - Prob. 4BTNCh. 17 - Prob. 5BTNCh. 17 - Prob. 6BTN
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