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WRD_ch17_SV - 17 Financial Statement Analysis Student...

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11-1 17-1 Financial Statement Analysis 17 Student Version
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11-2 17-2 1 Describe basic financial statement analytical methods. 17-2
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11-3 17-3 Horizontal Analysis The percentage analysis of increases and decreases in related items using comparative financial statements is called horizontal analysis . 1
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11-4 17-4 1 Horizontal Analysis: Horizontal Analysis: Difference $17,000 Base year (2009) $533,000 = 3.2% Exhibit 1 Comparative Balance Sheet— Horizontal Analysis
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11-5 17-5 Horizontal Analysis: Horizontal Analysis: Difference $25,800 Base year (2009) $64,700 = 39.9% 1 Comparative Schedule of Current Assets—Horizontal Analysis Exhibit 2
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11-6 17-6 Horizontal Analysis: Increase amount $296,500 Base year (2009 ) $1,234,000 = 24.0% 1 Comparative Income Statement— Horizontal Analysis Exhibit 3
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11-7 17-7 Comparative Retained Earnings Statement—Horizontal Analysis Horizontal Analysis: Horizontal Analysis: Increase amount $37,500 Base year (2009 ) $100,000 = 37.5% 1 Exhibit 4
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11-8 17-8 Vertical Analysis A percentage analysis used to show the relationship of each component to the total within a single statement is called vertical analysis . 1
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11-9 17-9 In 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 . Vertical Analysis of Balance Sheet 1
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11-10 17-10 Compar- ative Balance Sheet— Vertical Analysis Vertical Analysis: Vertical Analysis: Current assets $550,000 Total assets $1,139,500 = 48.3% 1 Exhibit 5
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11-11 17-11 In a vertical analysis of the income statement, each item is stated as a percent of net sales . Vertical Analysis of the Income Statement 1
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11-12 17-12 Vertical Analysis: Vertical Analysis: Selling expenses $191,000 Net sales $1,498,000 = 12.8% 1 Comparative Income Statement—Vertical Analysis Exhibit 6
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11-13 17-13 Common-Size Statements In a common-sized statements , all items are expressed as a percentage. Common-sized statements are useful in comparing the current period with prior periods, individual businesses, or one business with with industry percentages. 1
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11-14 17-14 Common-Sized Income Statement 1 Exhibit 7
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11-15 17-15 17-15 2 Use financial statement analysis to assess the solvency of a business.
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11-16 17-16 Working Capital The excess of current assets of a business over its current liabilities is called working capital . The working capital is often used in evaluating a company’s ability to pay current liabilities.
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