tailieunhanh - Lecture Introduction to Accounting: An integrated approach: Chapter 20 - Penne Ainsworth, Dan Deines

Chapter 20 - Company performance: Comprehensive evaluation. After completing this chapter, students will be able to: Perform a vertical analysis to analyze a company, demonstrate horizontal analysis to analyze a company, perform a ratio analysis to analyze a company, explain the various roles of the participants in the capital market. | Chapter 20 Company Performance: Comprehensive Evaluation Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 20- What is the Relationship Among Product, Capital, and Information Markets? Product Providers sell, and consumers buy, goods/services Capital Owners of capital give, and providers use, capital Information Providers disclose, and owners of capital evaluate, financial results 20- What are the Activities Involved in Annual Report Analysis? Study financial statements/annual report Industry analysis Statement analysis 20- What is Vertical Analysis and Why is it Important? Vertical analysis Relative size of each item on the income statement and balance sheet in relation to a base item (sales or total assets) Importance Reveals the relative importance of financial statement items 20- What is Horizontal Analysis and Why is it Important? Horizontal analysis Comparison of each item on the income statement and balance sheet to itself over time Importance Reveals trends in financial statement items 20- What is Ratio Analysis and Why is it Important? Ratio analysis Shows relationship between related financial statement items Importance Reveals important relationships that provide information about past performance 20- What are the Activity Ratios and Why are They Important? Accounts receivable turnover Sales/Average accounts receivable Inventory turnover Cost of goods sold/Average inventory Accounts payable turnover Cost of goods sold/Average accounts payable Evaluate the efficiency of operations 20- What are the Liquidity Ratios and Why are They Important? Current ratio Current assets/Current liabilities Quick ratio Liquid assets/Current liabilities Cash flow per share Operating cash flows/Weighted average number of common shares outstanding Evaluate the short-term cash position 20- What are the Debt-Paying Ability Ratios and Why are They Important? Times interest earned Income before interest and | Chapter 20 Company Performance: Comprehensive Evaluation Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 20- What is the Relationship Among Product, Capital, and Information Markets? Product Providers sell, and consumers buy, goods/services Capital Owners of capital give, and providers use, capital Information Providers disclose, and owners of capital evaluate, financial results 20- What are the Activities Involved in Annual Report Analysis? Study financial statements/annual report Industry analysis Statement analysis 20- What is Vertical Analysis and Why is it Important? Vertical analysis Relative size of each item on the income statement and balance sheet in relation to a base item (sales or total assets) Importance Reveals the relative importance of financial statement items 20- What is Horizontal Analysis and Why is it Important? Horizontal analysis Comparison of each item on the income statement and balance sheet to .