Business ratio analysis of financial statements over several years is generally helpful for the following reasons, EXCEPT Seleccione una:
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- 1. In financial statement analysis, what is the basic objective of observing trends in data and ratios? 2. Distinguish between trend percentages and component percentages. Which would be better suited for analyzing the change in sales over a term of several years?3. What is the quick ratio? Under what circumstances are short-term creditors most likely to regard a company’s quick ratio as more meaningful than its current ratio?4. Identify the ratios or other analytical tools used to evaluate profitability. Explain briefly how each is computed.5. Net sales of Major General Store have been increasing at a reasonable rate, but net income has been declining steadily as a percentage of these sales. What appears to be the problem?6. Why might earnings per share be more significant to a shareholder in a large corporation than the total amount of net income?7. ABC Co. has a current ratio of 3 to 1. Ono Corp. has a current ratio of 2 to 1. Does this mean that ABC’s operating cycle is longer than…Which of the following best describes trend analysis? A comparing a company's financial statements with that of other companies B expressing each financial statement amount as a percentage of a budgeted amount C expressing each year's financial statement amounts as a percentage of the base year amounts D calculating key ratios to evaluate performanceforecasted balance sheet is calculated from asset ratios that management has reviewed and changed based on industry and benchmark averages. An Excel spreadsheet is used for this analysis because changes in assumptions, financing, and ratios can be made to the statements to review alternative scenarios. The impact of these changes on the firm's forecasted financial statements ultimately can be used to improve the firm's operations. Quantitative Problem: At the end of last year, Edwin Inc. reported the following income statement (in millions of dollars): Sales Operating costs excluding depreciation EBITDA Depreciation $4,250.00 3,016.00 $1,234.00 320.00 $914.00 150.00 $764.00 305.60 $458.40 Looking ahead to the following year, the company's CFO has assembled this information: EBIT Interest EBT Taxes (40%) Net income ▪ Year-end sales are expected to be 4% higher than $4.25 billion in sales generated last year. ▪ Year-end operating costs, excluding depreciation, will equal 80% of sales. ■…
- A trend analysis indicates a firm's performance ____. a.over time b.more accurately than any other type of analysis c.at one given point in time d.without relying on financial ratiosHorizontal analysis : a. Is a technique for evaluating a series of financial statement data over a period of time. b. Is also known as trend analysis c. Is used to determine the increase or decrease that has taken place. d. Is expressed as either an amount or a percentage. e. All of the above.a) Prepare a projected income statement for the year to 31 October Year 8. b) Calculate for Year 7 and Year 8 i) Earnings per Share ii) Degree of operating gearing iii) Degree of financial gearing iv) Degree of combined gearing c) Briefly evaluate the information produced in a & b d) Calculate the sales revenue required in Year 8 to maintain existing earnings per share
- 1. What are some of the tests of a sound or healthy long-term financial position? 2. Give some indications of managerial efficiency in the use of company resources. 3. What are the most commonly used techniques in the analysis and interpretation of financial statements? 4. What are the steps involved in using trend percentages in financial analysis? 5. Distinguish between horizontal and vertical analysis of financial statement data 6. What is the basic objective in looking at trends in financial ratios and other data? 7. Define trendpercentages 8. Discuss the steps in analyzing financial statements using trend percentages. 9. In financial statement analysis, what is the basic objective of observing trends in data and ratios? Suggest some other standards of comparison. 10. Distinguish between trend percentages and component percentages. 11. Which would be better suited for analyzing the change in sales over a term of several years? 12. Nets sales of the Premiere General Store have been…Directions: Identify the variables if it can be regarded as a response variable and if it can be used as predictors? Give a brief explanation. 1.4 Company's assets, return on a stock, and net sales.. Financial Statement is a statement prepared for: Evaluating past performance O Predicting future performance Provide indices of business enterprises O All of above
- If you want an indication of the direction a business is taking, you would usea. benchmarking.b. trend percentages.c. industry analysis.d. vertical analysis.Your Task… Using your assigned financial statements calculate the required ratios below Indicate if the change from year to year is favorable or unfavorable. All values should be accurate to at least two decimal places. The expectation is to submit a professional report free of grammar and spelling errors and easy to read. Think of this as a menu you would be handing to a customer. All calculations are to be represented. Analysis of Profitability Gross Profit Ratio Operating Profit Ratio Net Profit Ratio Sales to Total Assets Ratio Return on Total Assets Return on Equity Earnings Per ShareSuppose you are trying to decide whether to invest in a company that generates a high expected ROE, and you want to conduct further analysis on the company’s performance. If you wanted to conduct a comparative analysis for the current year, you would: Compare the firm’s financial ratios for the current year with its ratios in previous years Compare the firm’s financial ratios with other firms in the industry for the current year You decide also to conduct a qualitative analysis based on the factors summarized by the American Association of Individual Investors (AAII). According to your understanding, a company with one key product is considered to be risky than companies with a wide range of products. The American Association of Individual Investors (AAII) has identified several qualitative factors that should also be considered when evaluating a company’s likely future financial performance. Consider the scenario and indicate how you would expect the…
