WRD_ch17

Accounting

Info iconThis preview shows pages 1–16. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 11-117-1Financial Statement Analysis1711-217-2Learning Objective 13-1Describe the nature of the adjusting process.Learning Objective 13-1Describe the nature of the adjusting process.Insert Chapter ObjectivesFinancial Statement Analysis1Describe basic financial statement analytical methods.2Use financial statement analysis to assess the solvency of a business.After studying this chapter, you should be able to:3Use financial statement analysis to assess the profitability of a business.4Describe the contents of corporate annual reports.17-211-317-31Describe basic financial statement analytical methods.17-311-417-4Basic Analytical MethodsUsers analyze a companys financial statements using a variety of analytical methods. Three such methods are as follows:1.Horizontal analysis1.Vertical analysis1.Common-sized statements111-517-5Horizontal AnalysisThe percentage analysis of increases and decreases in related items using comparative financial statements is called horizontal analysis.111-617-6Comparative Balance SheetHorizontal Analysis1Exhibit 111-717-71Horizontal Analysis: Horizontal Analysis: Difference$17,000Base year (2009)$533,000= 3.2%Exhibit 1Comparative Balance SheetHorizontal Analysis11-817-8Comparative Schedule of Current AssetsHorizontal Analysis1Exhibit 211-917-9Horizontal Analysis: Horizontal Analysis: Difference$25,800Base year (2009)$64,700= 39.9%1Comparative Schedule of Current AssetsHorizontal AnalysisExhibit 211-1017-10Comparative Income StatementHorizontal Analysis1Exhibit 311-1117-1117-11Horizontal Analysis:Horizontal Analysis:Increase amount$296,500Base year (2009) $1,234,000= 24.0%1Comparative Income StatementHorizontal AnalysisExhibit 311-1217-12Comparative Retained Earnings StatementHorizontal AnalysisHorizontal Analysis:Horizontal Analysis:Increase amount$37,500Base year (2009)$100,000= 37.5%1Exhibit 411-1317-131Example Exercise 17-1Horizontal AnalysisThe comparative cash and accounts receivable balances for a company are provided below.2010 2009Cash$62,500$50,000Accounts receivable (net)74,40080,000Based on this information, what is the amount and percentage of increase or decrease that would be shown in a balance sheet with horizontal analysis?17-13For Practice: PE 17-1A, PE 17-1BFollow My Example 6-1Follow My Example 17-1Cash$12,500 increase ($62,500 $50,000), or 25%Accounts receivable $5,600 decrease ($74,400 $80,000), or 7%11-1417-14Vertical AnalysisA percentage analysis used to show the relationship of each component to the total within a single statement is called vertical analysis.111-1517-15In a vertical analysis of the balance sheet, each asset item is stated as a percent of the total assets. Each liability and stockholders equity item is stated as a percent of the total liabilities and stockholders equity....
View Full Document

Page1 / 99

WRD_ch17 - 11-117-1Financial Statement...

This preview shows document pages 1 - 16. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online