Chapter 2, Problem 2.4EYCT

(a)

To determine

Financial statements: Financial statements are condensed summary of transactions, communicated to the users in the form of reports, for the purpose of decision making.

Working capital: The measure which evaluates the ability of a company to pay off the short-term debt obligations, by computing the excess of current assets over current liabilities is referred to as working capital. This ratio assesses the liquidity of a company.

Current ratio: The financial ratio which evaluates the ability of a company to pay off the debt obligations, which mature within one year, or within completion of operating cycle, is referred to as current ratio. This ratio also assesses the liquidity of a company.

Debt to assets ratio: This financial ratio evaluates the ability of a company to pay off long-term debt obligations, owed to creditors. This ratio assesses the solvency of a company.

To compute: Overall decrease percentage in the amount of assets of Incorporation G from 2013 to 2017.

(b)

To determine

To mention: The changes in liquidity from 2013 to 2017 of Incorporation G from 2013 to 2017

To state: Whether working capital and current ratio are better measures of liquidity for Incorporation G

To indicate: The measures that explain the change in liquidity for Incorporation G

(c)

To determine

To mention: The changes in solvency from 2013 to 2017 of Incorporation G from 2013 to 2017

(d)

To determine

To mention: The changes in profitability from 2013 to 2017 of Incorporation G from 2013 to 2017, and discuss how this change could be used to predict the future profitability of Incorporation G