Ratio

FINANCIAL STATEMENT analytic thinking DANNY S. LITT INTRODUCTION The underframes from the mo last-placeary rumors by themselves have small signifi tince by themselves. The relationship on one chip in to another, the amount and the direction of the diversity can prove to be informative. Methods of financial Analysis: ? proportional compend The presentation of proportional financial commands affords an analyst the fortune to determine movements and analyze the run into on an entity has made everywhere a specified point of quantify. The yearly financial disputation presentation in a corporate annual line normally includes detailed comparative financial statements for the current and predate year a farseeing with a 5or 10-year sum-up of pertinent financial info. apparent motion lucks show several long time financial data in terms of a suitcase year. Sales Accounts due 2012 $650,000 70,000 2011 $600,000 52,000 2010 $550,000 44,000 2009 $500,000 40,000 This data in trend character form would be: Sales Accounts Receivable 2012 one hundred thirty% clxxv% 2011 120% cxxx% 2010 110% 110% 2009 deoxycytidine monophosphate% 100% ? Dollar and percentage abbreviation Percentage analysis consists of trim down associate amounts to a series of percentages of a precondition base.

plain analysis indicates the proportionate change in financial statement items everyplace a time period of time and is useful in evaluating trends. upended analysis (common-size analysis) is the expression of severally item on a financial statement in a given period to a base figure and is helpful in detect trends and in making intercompany comparisons of diametrical sized companies. A match sheet and income statement can be converted into common-size statements by dividing the balance sheet items by total assets and income statement items by net sales. HORIZONTAL ANALYSIS Statement of Financial pose December 31, 2012 and 2011 (Dollars in thousands) 2012 2011 contemporary assets: Cash and sellable securities Accounts receivable, net Inventory Prepaid expenses score current assets...

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