Financial Statement Analysis Horizontal Analysis Exercise 13-16A Trend Percentages

Financial Statement Analysis Horizontal Analysis Exercise 13-16A Trend Percentages www.phwiki.com

Financial Statement Analysis Horizontal Analysis Exercise 13-16A Trend Percentages

Stutzer, Wayne, Host has reference to this Academic Journal, PHwiki organized this Journal Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall. Financial Statement Analysis Chapter 13 Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall. Per as long as m a horizontal analysis Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall.

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Horizontal Analysis Study of percentage changes from year-to-year Two steps: 1. Compute dollar amount of change 2. Divide dollar amount of change by base-period amount Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall. Exercise 13-16A Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall. Trend Percentages Form of horizontal analysis Base year selected in addition to set equal to 100% Amount of each following year stated as a percent of base Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall.

Per as long as m a vertical analysis Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall. Vertical Analysis Shows relationship of a financial-statement item to its base For Income Statement, total revenue is the base For Balance Sheet, total assets is the base Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall. Vertical analysis % Total revenue Each income statement item Prepare common-size financial statements Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall.

Common-Size Statements Report only vertical analysis percents No dollar amounts Help in the comparison of different companies Financial results in terms of a common denominator Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall. Benchmarking Compares company to a st in addition to ard set by others Often a key competitor Facilitated by common-size statements Has goal of improvement Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall. Analyze the statement of cash flows Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall.

Cash-Flow Signs of Healthy Company Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall. Use ratios to make business decisions Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall. Ratio Categories Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall.

Ability to Pay Current Liabilities Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall. Working Capital & Current Ratio Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall. Quick (Acid-Test) Ratio Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall.

Measuring Turnover in addition to the Cash Conversion Cycle Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall. Inventory Turnover Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall. (Beginning inventory + Ending inventory)/2) Accounts Receivable Turnover Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall. (Beginning net receivables + Ending net receivables)/2)

Days’-Sales-In-Receivables Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall. Accounts Payables Turnover Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall. Cash Conversion Cycle Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall. DIO = Days’ Inventory Outst in addition to ing DSO = Days’ Sales Outst in addition to ing DPO = Days’ Payable Outst in addition to ing

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Measuring Leverage: Overall Ability to Pay Debts Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall. Debt ratio Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall. Times-Interest-Earned Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall.

Exercise 13-22A Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall. Exercise 13-22A Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall. 2012 Exercise 13-22A Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall. 2011

Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall.

Stutzer, Wayne Host

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