Chapter 1, Problem 1.1FSC

To determine

Using the Financial Statements:

Financial Statement analysis is done using the components of a financial statement. These components are Balance sheet, Income statement, Statement of Cash flows, etc. Annual report of a company contains a financial statement of that year and the previous year for comparison. If the company has subsidiaries or segments, the financial statement shall be consolidated for the whole business of the company.

Basic Accounting Equation:

The basic accounting equation is the mathematical presentation of a relationship between Assets, Liabilities and Equity. The formula is as follows:

  $\text{Assets = Liabilities + Equity}$

Return on Assets: Return on assets is a ratio used to find the percentage of net income earned on the amount of assets. It is calculated by dividing net income by total assets of the business. It is calculated with the help of following formula:

  $\text{Return on Asset =}\frac{\text{Net Income}}{\text{Total Assets}}\times 100$

1. T corporation’s Cash and Cash equivalent on January 30, 2016

To indicate: T corporation’s cash and cash equivalent on January 30, 2016.

To determine

To indicate: T corporation’s Total Assets as on January 30, 2016, and January 31, 2015.

To determine

To indicate: T corporation’s Accounting equation as at January 30, 2016

To determine

To indicate: T corporation’s Total Sales for the year ended January 30, 2016, and comparison with year 2014 and 2015.

To determine

To indicate: T corporation’s Net income for the year 2014 and 2015 and comparison between them.

To determine

T corporation’s Return on assets for the year ending on January 30, 2015.

To determine

To indicate: Comparison of target corporation return on the asset with K’s corporation return on assets