🏷️ LIMITED TIME OFFER: GET 20% OFF GRADE+ YEARLY SUBSCRIPTION →
Log in
Accounting
3
answers
0
watching
445
views
21 Feb 2020

Which of the following best describes trend analysis?

 

  1. expressing each year’s figures of financial statements as a percentage of the base year figures.

  2. comparing a company’s financial statements with that of other companies.

  3. calculating key ratios to evaluate performance

  4. expressing each figure as a percentage of a budget figure

Watch
3
answers
0
watching
445
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share
Already have an account? Log in
Share
Jarrod Robel
Jarrod RobelLv2
21 Feb 2020
Already have an account? Log in
Share

Related questions

You are one of the Audit Partners of XYZ Certified Chartered Accountants Firm. You have seen a new prospective client, Performance Auto Parts Corporation. Performance Auto Parts has three locations specializing in the sale of motor vehicle auto parts as well as repair to motor vehicles. The business is owned by a widow, Mrs. Armstrong, who inherited the business upon the passing of her husband. Mrs. Armstrong has no relevant business operation skills or knowledge of the industry in which the business operates. She currently is dependent on her team of accounting clerks, led by a Financial Controller to be ethical. The Financial Controller has ultimate authority and makes decisions in all areas of the operations. Mrs. Armstrong does not require a report on the business performance. She is required to sign on all cheques but does not question the expense as long as the Financial Controller authorizes it. The accounting staff consists of six young persons with no prior accounting experience or qualification. Two accounting clerks are located at each of the business locations. They have been trained solely by the Financial Controller. The Financial Controller is paid a bonus, which is a percentage of the net profit. He was overheard by a client expressing his frustration that he has not been able to meet his monthly expenses even though he plays such a key role in the organization. You have successfully managed to schedule a meeting with Mrs. Armstrong.

i. Explain the elements of fraud and why her business is at risk.

ii. Provide an explanation of two advantages and two disadvantages to Mrs. Armstrong and or company.

iii. The responsibilities of both management at Performance Auto Parts and your firm regarding the performance of an external audit

Assignment 2: You Are an InvestmentAnalyst
Due Week 10 and worth 250 points

As the CFO of your corporation, you are in charge of preparing andanalyzing financial statements that will be presented to potentialinvestors and creditors. However, before you can present thefinancial statements to investors and creditors, you need toprepare the financial statements with supporting analysis. Selectone (1) pair of the following companies to conduct your financialstatement analysis.

Pepsi versus Coca Cola, or

Amazon versus eBay

Target versus Walmart

Nike versus Reebok

Write a six to eight (6-8) page paper in which you:

1) Analyze each company’s history, product / services, majorcustomers, major suppliers, and leadership, and provide a synopsisof each company.

2) Identify three (3) profitability ratios that creditors may beinterested in. Calculate the ratio for each company, and prepare areport to summarize your findings on the financial health of eachcompany. Also, recommend to management the manner in which they canimprove each of the three (3) ratios identified.

3) Summarize at least two (2) news events (this may includemergers, acquisitions, or political issues) that occurred from 2012to the present day, and analyze the impact that these events had oneach company’s financial statements. Indicate the primary way inwhich the merger, acquisition or political issues influencepotential investors’ and creditors’ perception of bothcompanies.

4) Analyze each company’s income statement over the past two (2)years, and determine which company outperformed the other. Suggesta way in which the lagging company can improve its income. Supportyour suggestion with a specific analysis.

5) Analyze each company’s balance sheet. Prepare a verticalanalysis for each company, interpret the results, and write afinancial report. Also, suggest the manner in which the companythat is not performing well can improve its balance sheet in orderfor it to be attractive to potential investors.

6) Use at least four (4) quality academic resources in thisassignment. Note: Wikipedia and other Websites donot qualify as academic resources. PLEASE INCLUDE THE WEBSITES USEDFOR INFORMATION.

Choose a publicly traded company and perform an expandedanalysis on the financial statements (AMAZON.COM INC) . Use theannual statements in Yahoo Finance (http://finance.yahoo.com/quote/AMZN?p=AMZN ). Complete thefollowing for your chosen firm in an Excel spreadsheet:

1. Horizontal and vertical analysis of the income statements forthe past three years (all yearly balances set as a percentage oftotal revenues for that year).

2. Horizontal and vertical analysis of the balance sheets forthe past three years (all yearly balances set as a percentage oftotal assets for that year).

3. Ratio analysis (nine ratios of your choosing) for the pastthree years PLUS a measurement for the creditworthiness of yourfirm as measured by Altman’s Z-score. You MUST also present currentyear competitor ratios for your ratio analysis Ebay; (http://finance.yahoo.com/quote/EBAY/?p=EBAY ). Comparing yourfirm’s ratios to a close competitor or an industry-average ratiomakes your analysis much more meaningful.

**Financial ratios are mathematical comparisons of financialstatement accounts or categories; 1. The current ratio iscalculated by dividing current assets by current liabilities. 2.The working capital ratio is calculated by dividing current assetsby current liabilities. 3. The times interest earned ratio iscalculated by dividing income before interest and income taxes bythe interest expense. 4. Accounts receivable turnover is calculatedby dividing net credit sales by the average accounts receivable forthat period. 5. The inventory turnover ratio is calculated bydividing the cost of goods sold for a period by the averageinventory for that period. 6. The asset turnover ratio iscalculated by dividing net sales by average total assets 7. Thereturn on equity ratio formula is calculated by dividing net incomeby shareholder's equity. 8. The profit margin ratio formula can becalculated by dividing net income by net sales. 9. The return onassets ratio formula is calculated by dividing net income byaverage total assets.**

Much of this course has concentrated on learning the financialstatements, primarily because there was not an accountingprerequisite. Because of this concentration, you may find thisassignment challenging. However, if you understand the financialstatements, then the horizontal and vertical analysis should berather intuitive. For example, if you see sales rise by 20%, thenshouldn’t you also see net income rise by 20% or more if themanagers are effective at controlling costs? If you see sales riseby 20% and assets rise by 40%, you have to ask why this ishappening. It would appear that assets have risen too far given thesales that are generated from those assets—why did this occur? Youmay have to research that type of question and discuss it in youranalysis.

Amazon's financial statements:

http://finance.yahoo.com/quote/AMZN?p=AMZN

Weekly leaderboard

Home
Homework Help 3,900,000
Accounting 580,000
Start filling in the gaps now
Log in