KIC000081 - > A110w5comparisons of how things like gross...

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CHAPTER rs Measuring and Evaluation Financial Performance c,,,,,_ \l 1' ' 1' IJ Trend Analysis );0 Horizontal or time series analysis show year to year changes as a percentage of the base year Change this year Prior Year Amount :>Use to see ifselJing and administrative expense is growing faster than sales, for example. 2 I'h.op.ll Vertical Analysis >- Express each financial statement amount as a percentage of the base >- On the income statement, the base is sales and express the fest of the income statement as a percentage of sales. s-On the balance sheet, the base is total assets.
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Unformatted text preview: );> A110w5comparisons of how things like gross profit rate have changed over time • • • Ratio Analysis »-Ratio analysis compares items in the financials (and certain external items)to each other to look for relationships ::;.Three main categories of ratios: I. Profitahility: measures the overall success of a company 2. Uquidily: measures the ability to meet currently maturing debts 3. Solvency: measures the ability to meet long-term obi igations 4 ChoF>IJ ( l • • L1 dJbt-l fiN q ,000 •...
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This note was uploaded on 09/01/2011 for the course ACCT 284 taught by Professor Clem during the Fall '08 term at Iowa State.

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KIC000081 - > A110w5comparisons of how things like gross...

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