Acct 102 Chap 11

Acct 102 Chap 11 - Vertical Analysis is a financial...

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Acct 102 – Chap 11 Horizontal Analysis is a financial analysis technique of comparing amounts of the same item over several time periods. Liquidity Ratios measure a company’s capacity to pay short-term debt. Profitability Ratios measure a company’s capacity to generate revenue. Ratio Analysis is a financial analysis technique of comparing numerical relationships between two different financial statement items to draw conclusions. Solvency Ratios measure a company’s capacity to pay long-term debt. Trend Analysis studies business performance over a period of time.
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Unformatted text preview: Vertical Analysis is a financial analysis technique of comparing items within financial statements to significant totals. Working Capital measures the adequacy of short-term assets. It is computed by subtracting current liabilities from current assets. Formulas to Review Current Ratio = Current Assets/Current Liabilities Quick Ratio = Quick Assets/Current Liabilities Accounts receivable turnover = Net credit sales/average accounts receivable Inventory turnover = Cost of Goods Sold/Average Inventory...
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This note was uploaded on 03/31/2011 for the course ACCT 102 taught by Professor Wang during the Spring '11 term at Adelphi.

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