
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:
Current Ratio − It is a measure of the relation between the current assets and current liabilities and seeks to measure the ability of the business to fulfill its short term obligations.
- Current assets are assets that are convertible to cash within a period of one year or less. Current liabilities are liabilities that need to be discharged within a period of one year or less.
Trend Analysis
- Trend Analysis is a technique of performance measurement and evaluation where the performance of the current year is compared to that of a base year and the direction of the results are analyzed.
- The movement of the results can be interpreted as a positive or favorable trend or as a negative or unfavorable trend.
- Favorable trends mean increase in revenues and decrease in costs and are hence subjective in nature. Unfavorable trends mean decrease in revenues and increase in costs and are also subjective in nature.
- Trend analysis helps in evaluation of repetitive behavior as well as evaluation of effectiveness of strategies implemented by allowing analysis of performance over time.
To Determine:
If it is easier for company to meet current liabilities on time and take advantage of cash discounts if any
2)
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:
Accounts receivable turnover − A measure of the relation between the turnover and accounts receivable measured in number of times.
- It seeks to measure the relation of the credit sales in proportion to the total turnover and is an indicator of how much of the receivables are blocked due to credit sales.
To Determine:
If company is collecting its’ accounts receivable rapidly.
3)
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:
- Accounts receivable turnover − A measure of the relation between the turnover and accounts receivable measured in number of times.
- It seeks to measure the relation of the credit sales in proportion to the total turnover and is an indicator of how much of the receivables are blocked due to credit sales.
Trend Analysis
- Trend Analysis is a technique of performance measurement and evaluation where the performance of the current year is compared to that of a base year and the direction of the results are analyzed.
- The movement of the results can be interpreted as a positive or favorable trend or as a negative or unfavorable trend.
- Favorable trends mean increase in revenues and decrease in costs and are hence subjective in nature. Unfavorable trends mean decrease in revenues and increase in costs and are also subjective in nature.
- Trend analysis helps in evaluation of repetitive behavior as well as evaluation of effectiveness of strategies implemented by allowing analysis of performance over time.
To Determine:
If company’s investment in accounts receivable is decreasing.
4)
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:
- Sales to Plant assets − A measure of the total turnover of the company in relation to the total investment in plant assets of a company.
- It is an extension of the asset turnover ratio and seeks to measure proportion of plant assets and turnover in particular.
To Determine:
If investment in plant assets is decreasing
5)
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:
- Return on Shareholders’ Equity − A measure of the total earnings of the equity share holders in proportion to the share capital introduced by them.
- It seeks to measure the proportion of the total earnings in relation to the investment made and is an effective way to evaluate how profitable the investment in the company is.
To Determine:
If owners’ investment is getting more profitable
6)
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.
Trend Analysis
- Trend Analysis is a technique of performance measurement and evaluation where the performance of the current year is compared to that of a base year and the direction of the results are analyzed.
- The movement of the results can be interpreted as a positive or favorable trend or as a negative or unfavorable trend.
- Favorable trends mean increase in revenues and decrease in costs and are hence subjective in nature. Unfavorable trends mean decrease in revenues and increase in costs and are also subjective in nature.
- Trend analysis helps in evaluation of repetitive behavior as well as evaluation of effectiveness of strategies implemented by allowing analysis of performance over time.
To Determine:
If dollar amount of selling expenses has decreased over the three year period.

Want to see the full answer?
Check out a sample textbook solution
Chapter 17 Solutions
Fundamental Accounting Principles -Hardcover
- Please give me correct answer this financial accounting questionarrow_forwardFinancial Accountingarrow_forwardHunger Games Corporation has had a defined benefit pension plan for three decades. Two years ago, the company improved the benefits at a cost of $2,800,000. Pension plan assets were $84,000,000 while pension obligations were $76,000,000 at the beginning of the year. For the current year, Hunger Games 's pension plan incurred current service cost of $6,400,000 and interest of $8,600,000. The pension's assets earned $9,000,000, which is $400,000 below expectations. There were no actuarial gains or losses for the year. Required Compute the pension expense for the year. Record the journal entries for Hunger Games's pension plan.arrow_forward
- Please provide the correct answer to this general accounting problem using valid calculations.arrow_forwardI need assistance with this general accounting question using appropriate principles.arrow_forwardCan you explain this financial accounting question using accurate calculation methods?arrow_forward
- In the first two years of operations, Expos company reports taxable income of $125,000 and $65,000, respectively. In the first two years, the company paid $50,000 and $13,000. It is now the end of the third year, and the company has a loss of $160,000 for tax purposes. The company carries losses to the earliest year possible. The tax rate is currently 25%. Required Compute the amount of income tax payable or receivable in the current (third) year.arrow_forwardFinancial Accountingarrow_forwardPlease give me true answer this financial accounting questionarrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





