Prepare a vertical analysis on the consolidated income statement for all three years and discuss the benefit in this analysis.

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Answer 1

Question

Chapter 12, Problem 1FA

1.

To determine

Prepare a vertical analysis on the consolidated income statement for all three years and discuss the benefit in this analysis.

2.

To determine

Prepare a horizontal analysis on the consolidated income statement for two years and discuss the benefit in this analysis.

3.

To determine

Using Company CS consolidated income statement to find out basic EPS for each fiscal year and EPS increased or decreased over the three years, and tell for what reason EPS keeps changing.

4.

To determine

Compute net working capital, current ratio, quick ratio, return on sales and return on equity for last two years and state liquidity improved or deteriorated.

5.

To determine

Compute dividend yield and price earnings ratio for the current year, and state whether industry average PE ratio was 24 times earnings and the dividend yield was 1.5% for the industry.

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Mastery Problem: Financial Statement Analysis Liquidity and Solvency Measures Your friend, another accountant, has bet you that with your knowledge of accounting and just the computations for common analytical measures, you can figure out many aspects of a company's financial statements. You take the bet! Match each computation to one of the liquidity and solvency measures in the table. (Hint: Begin by looking for simple computations and identifying the amounts in those computations. Look for other measures that use those amounts.) Liquidity and Solvency Measures Computations Working capital $3,095,000 – $900,000 Current ratio $3,095,000 ÷ $900,000 Quick ratio $1,866,000 ÷ $900,000 Accounts receivable turnover $8,280,000 ÷ [($714,000 + $740,000) ÷ 2] Number of days' sales in receivables [($714,000 + $740,000) ÷ 2] ÷ ($8,280,000 ÷ 365) Inventory turnover $4,100,000 ÷ [($1,072,000 + $1,100,000) ÷ 2] Number of days' sales in inventory…

Mastery Problem: Financial Statement Analysis Liquidity and Solvency Measures Your friend, another accountant, has bet you that with your knowledge of accounting and just the computations for common analytical measures, you can figure out many aspects of a company's financial statements. You take the bet! Match each computation to one of the liquidity and solvency measures in the table. (Hint: Begin by looking for simple computations and identifying the amounts in those computations. Look for other measures that use those amounts.) Liquidity and Solvency Measures Computations Working capital $3,095,000 – $860,000 Current ratio $3,095,000 ÷ $860,000 Quick ratio $1,866,000 ÷ $860,000 Accounts receivable turnover $8,250,000 ÷ [($714,000 + $740,000) ÷ 2] Number of days' sales in receivables [($714,000 + $740,000) ÷ 2] ÷ ($8,250,000 ÷ 365) Inventory turnover $4,100,000 ÷ [($1,072,000 + $1,100,000) ÷ 2] Number of days' sales in inventory…

Mastery Problem: Financial Statement Analysis Question Content Area Liquidity and Solvency Measures Your friend, another accountant, has bet you that with your knowledge of accounting and just the computations for common analytical measures, you can figure out many aspects of a company's financial statements. You take the bet! Match each computation to one of the liquidity and solvency measures in the table. (Hint: Begin by looking for simple computations and identifying the amounts in those computations. Look for other measures that use those amounts.)

Answer 2

Question

Chapter 12, Problem 1FA

1.

To determine

Prepare a vertical analysis on the consolidated income statement for all three years and discuss the benefit in this analysis.

2.

To determine

Prepare a horizontal analysis on the consolidated income statement for two years and discuss the benefit in this analysis.

3.

To determine

Using Company CS consolidated income statement to find out basic EPS for each fiscal year and EPS increased or decreased over the three years, and tell for what reason EPS keeps changing.

4.

To determine

Compute net working capital, current ratio, quick ratio, return on sales and return on equity for last two years and state liquidity improved or deteriorated.

5.

To determine

Compute dividend yield and price earnings ratio for the current year, and state whether industry average PE ratio was 24 times earnings and the dividend yield was 1.5% for the industry.

Expert Solution & Answer

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See solution

Answer 3

Question

Chapter 12, Problem 1FA

1.

To determine

Prepare a vertical analysis on the consolidated income statement for all three years and discuss the benefit in this analysis.

2.

To determine

Prepare a horizontal analysis on the consolidated income statement for two years and discuss the benefit in this analysis.

3.

To determine

Using Company CS consolidated income statement to find out basic EPS for each fiscal year and EPS increased or decreased over the three years, and tell for what reason EPS keeps changing.

4.

To determine

Compute net working capital, current ratio, quick ratio, return on sales and return on equity for last two years and state liquidity improved or deteriorated.

5.

To determine

Compute dividend yield and price earnings ratio for the current year, and state whether industry average PE ratio was 24 times earnings and the dividend yield was 1.5% for the industry.

Expert Solution & Answer

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Answer 4

Question

Chapter 12, Problem 1FA

1.

To determine

Prepare a vertical analysis on the consolidated income statement for all three years and discuss the benefit in this analysis.

2.

To determine

Prepare a horizontal analysis on the consolidated income statement for two years and discuss the benefit in this analysis.

3.

To determine

Using Company CS consolidated income statement to find out basic EPS for each fiscal year and EPS increased or decreased over the three years, and tell for what reason EPS keeps changing.

4.

To determine

Compute net working capital, current ratio, quick ratio, return on sales and return on equity for last two years and state liquidity improved or deteriorated.

5.

To determine

Compute dividend yield and price earnings ratio for the current year, and state whether industry average PE ratio was 24 times earnings and the dividend yield was 1.5% for the industry.

Expert Solution & Answer

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Answer 5

Chapter 12, Problem 1FA

1.

To determine

Prepare a vertical analysis on the consolidated income statement for all three years and discuss the benefit in this analysis.

2.

To determine

Prepare a horizontal analysis on the consolidated income statement for two years and discuss the benefit in this analysis.

3.

To determine

Using Company CS consolidated income statement to find out basic EPS for each fiscal year and EPS increased or decreased over the three years, and tell for what reason EPS keeps changing.

4.

To determine

Compute net working capital, current ratio, quick ratio, return on sales and return on equity for last two years and state liquidity improved or deteriorated.

5.

To determine

Compute dividend yield and price earnings ratio for the current year, and state whether industry average PE ratio was 24 times earnings and the dividend yield was 1.5% for the industry.

Answer 6

Chapter 12, Problem 1FA

1.

To determine

Prepare a vertical analysis on the consolidated income statement for all three years and discuss the benefit in this analysis.

Answer 7

Chapter 12, Problem 1FA

1.

To determine

Prepare a vertical analysis on the consolidated income statement for all three years and discuss the benefit in this analysis.

Answer 8

2.

To determine

Prepare a horizontal analysis on the consolidated income statement for two years and discuss the benefit in this analysis.

Answer 9

2.

To determine

Prepare a horizontal analysis on the consolidated income statement for two years and discuss the benefit in this analysis.

Answer 10

3.

To determine

Using Company CS consolidated income statement to find out basic EPS for each fiscal year and EPS increased or decreased over the three years, and tell for what reason EPS keeps changing.

Answer 11

3.

To determine

Using Company CS consolidated income statement to find out basic EPS for each fiscal year and EPS increased or decreased over the three years, and tell for what reason EPS keeps changing.

Answer 12

4.

To determine

Compute net working capital, current ratio, quick ratio, return on sales and return on equity for last two years and state liquidity improved or deteriorated.

Answer 13

4.

To determine

Compute net working capital, current ratio, quick ratio, return on sales and return on equity for last two years and state liquidity improved or deteriorated.

Answer 14

5.

To determine

Compute dividend yield and price earnings ratio for the current year, and state whether industry average PE ratio was 24 times earnings and the dividend yield was 1.5% for the industry.

Answer 15

5.

To determine

Compute dividend yield and price earnings ratio for the current year, and state whether industry average PE ratio was 24 times earnings and the dividend yield was 1.5% for the industry.

Answer 16

Expert Solution & Answer

Answer 17

Expert Solution & Answer

Answer 18

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Answer 19

Ch. 12 - Prob. 1DQ Ch. 12 - Which amount is the base amount for vertical...Ch. 12 - Prob. 3DQ Ch. 12 - Prob. 4DQ Ch. 12 - Prob. 5DQ Ch. 12 - Prob. 6DQ Ch. 12 - Prob. 7DQ Ch. 12 - How would you expect a recession to affect asset...Ch. 12 - Prob. 9DQ Ch. 12 - Prob. 10DQ

Prepare a vertical analysis on the consolidated income statement for all three years and discuss the benefit in this analysis.

Solution Summary: The author explains that vertical analysis is prepared to analyze the relationship among various financial statements with a particular base amount.

Prepare a vertical analysis on the consolidated income statement for all three years and discuss the benefit in this analysis.

Prepare a horizontal analysis on the consolidated income statement for two years and discuss the benefit in this analysis.

Using Company CS consolidated income statement to find out basic EPS for each fiscal year and EPS increased or decreased over the three years, and tell for what reason EPS keeps changing.

Compute net working capital, current ratio, quick ratio, return on sales and return on equity for last two years and state liquidity improved or deteriorated.

Compute dividend yield and price earnings ratio for the current year, and state whether industry average PE ratio was 24 times earnings and the dividend yield was 1.5% for the industry.

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Chapter 12 Solutions