ACCT 2101 Lecture Notes - Lecture 13: Fixed Asset, Inventory Turnover, Current Liability
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Need to know 3 things: the general categories to evaluate, the particular elements within each category, how to measure performance. Benchmarks, which help when i(cid:374)te(cid:396)p(cid:396)eti(cid:374)g a (cid:272)o(cid:373)pa(cid:374)y"s (cid:396)atios, (cid:272)a(cid:374) i(cid:374)(cid:272)lude the (cid:272)o(cid:373)pa(cid:374)y"s p(cid:396)io(cid:396) yea(cid:396) results, as well as the results of close competitors or the average for the industry. Current year total - prior-year (base-year) total x 100: evaluate the results: trends in horizontal analysis. B/s - reveals whether a company grew during the year and indicates whether a company changed its reliance on debt vs. equity financing. I/s - analysis indicates key changes in operations of the company: vertical analysis, compute - create common size financial statements that express each line of the income statement (or bs) as a percentage of total sales/assets. Stated item as a portion of another total item. This information tells the reader whether the proportions within each statement category are changing: evaluate the results: relationships in vertical analysis.
