Chap013

Fundamentals of Financial Accounting with Annual Report

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Chapter 13 - Measuring and Evaluating Financial Performance CHAPTER 13 MEASURING AND EVALUATING FINANCIAL PERFORMANCE Student Learning Objectives and Related Assignment Materials Student Learning Objectives Mini- Exercises Exercises Coached Problems Problems (Groups Skills Development Cases Multi- chapter Material 1. Describe the purposes and uses of horizontal, vertical, and ratio analyses. 2. Use horizontal (trend) analyses to recognize financial changes that unfold over time. 1*, 6* 1*, 3* 1 A1, B1 7 3. Use vertical (common size) analyses to understand important relationships within financial statements. 2*, 6* 1*, 3* 3, 4 A3, A4, B3, B4 7 4. Calculate financial ratios to assess profitability, liquidity, and solvency. 5, 6*, 7, 8, 9, 10, 11, 12 2, 4*, 5, 6, 7, 8, 9, 10*, 11, 12, 13*, 14 2, 5, 6 A2, A5, A6, B1, B2, B5, B6 1, 3, 5, 6 CC13† 5. Interpret the results of financial analyses. 3, 4, 8, 11, 12 2, 5, 6 1, 2, 3, 4, 5, 6, 7 A1, A2, A3, A4, A5, A6, A7, B1, B2, B3, B4, B5, B6, B7 2, 3, 5, 6 CC13† 6. Describe how analyses depend on key accounting decisions and concepts. 13, 14, 15 15 6 A6, B 3, 4, 6 Supplement 13A: Nonrecurring and Other Special Items Supplement 13B: Reviewing and Contrasting IFRS and GAAP. *Animated solution included in the PowerPoint Slides. †CC13 is a continuing case that builds on the story of Nicole’s Getaway Spa, introduced in earlier chapters. This case focuses on analyzing transactions and preparing journal entries. 13-1
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Chapter 13 - Measuring and Evaluating Financial Performance Overview This chapter pulls together financial statement analysis, accounting method choices, and accounting concepts, showing how a difficult economic environment is revealed in Lowe’s financial statements (and, where appropriate, in those of The Home Depot). Students learn through a demonstration of horizontal, vertical, and ratio analyses that evaluate the company’s profitability, liquidity, and solvency. Chapter supplements discuss nonrecurring and special items (A) and summarize key topics involving IFRS, referencing specific pages in each chapter where these topics are integrated (B). Synopsis of Chapter Revisions New Focus Company: Lowe’s New chapter opener More prominent placement for vertical analysis New Spotlight contrasting Lowe’s GAAP accounting policies with the IFRS accounting policies of Europe’s largest home improvement retailer (Kingfisher) Five new questions, two new mini-exercises, and three new cases One new continuing case Summary of Related Video Program McGraw-Hill/Irwin Financial Accounting Video Series Program #17 – Financial Statement Analysis (9:34) The discussion of financial statement analysis in this video goes well beyond the calculation of a company’s ratios; the use of other information is also stressed. The video begins by using the role of newspaper reporters is used as an analogy for financial analysis; knowing what to ask is stressed. A banker addresses the importance of the consideration of a company’s liquidity. A securities analyst
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Chap013 - Chapter 13 - Measuring and Evaluating Financial...

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