Chapter 3 Comments 8th ed

Chapter 3 Comments 8th ed - Instructor Comments Chapter...

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Instructor Comments Chapter Three Hopefully, Chapter 3 will provide a little relief from the intense study required in Chapter 2. This chapter provides an introduction to some basic concepts and formulas relative to financial statement analysis. Those of you who are interested in the field of Finance (banking, the stock market, investments, etc.) should be particularly interested in this Chapter. Make sure that you are familiar with the various formulas in the chapter, in particular, the rate of return on page 72; return on investment , sometimes called return on assets; the DuPont model on page 75; and return on equity on page 77. Note also the formula to calculate interest at the bottom of page 72. The working capital and measures of liquidity sections of the chapter are important, especially the concept of working capital , the current ratio , and the acid test ratio . You will note that these formulas require an understanding of the composition of current assets and current liabilities, which you were exposed to in Chapter two. The chapter ends with a discussion of trend analysis, which is much more meaningful if several periods are included in the data
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This note was uploaded on 04/23/2011 for the course ACC 490 taught by Professor Johnthompson during the Spring '10 term at Murray State KY.

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Chapter 3 Comments 8th ed - Instructor Comments Chapter...

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