ACC 113 Lecture Notes - Lecture 7: Current Liability, Financial Statement, Public Company Accounting Oversight Board

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Use ratios to evaluate a company"s profitability, liquidity, and, solvency. A technique that expresses the relationship among selected items of financial. Expresses the mathematical relationship between one quantity and another. Intracompany comparisons covering two years for the same company. Industry-average comparisons based on average ratios for particular industries. Intercompany comparisons based on comparisons with a competitor. Measures the income or operating success of a company for a given time period. Net income preferred dividends = preferred stock. Earnings per share (eps) = net income preferred dividends/weighted. Measures the net income earned on each share of common stock. Weighted average = shares at the beginning of the year + end of year 2. Measures a company"s short-term ability to meet its obligations. Working capital = current assets current liabilities. [1. 41:1] for every dollar of current liabilities, the company has. Doesn"t reflect the composition (what the different assets are) of current assets.

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