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Cornerstones of Financial Accounti...
Case 1-70 Financial Statement Analysis
Reproduced below are portions of the president’s letter to stockholders and selected income statement and balance sheet data for the Wright Brothers Aviation Company. Wright Brothers is a national airline that provides both passenger service and package delivery service.
Required:
The price of Wright Brothers stock declined steadily throughout the 2015-2019 period. Do you consider this decline to be a reasonable reaction to the financial results reported? Why or why not?
Concept Introduction:
Financial Statement analysis is done using the components of financial statement. These components are Balance sheet, Income statement, Statement of Cash flows etc. Annual report of a company contains financial statement of that year and previous year for comparison. If the company has subsidiaries or segments, the financial statement shall be consolidated for whole business of the company.
To Identify:
The reason of fall in the market price of Wright Brothers Aviation Company stock.
The trend analysis of Revenue, operating income and net income for the given period 2015-2019 is explained as follows:
| Wright Brothers Aviation Company | |||||
| Trend Analysis | |||||
| Â | Â | Â | Â | Â | Â |
| Year 2015 | Year 2016 | Year 2017 | Year 2018 | Year 2019 | |
| Revenue | $ 540,486 | $ 593,755 | $ 500,186 | $ 197,025 | $ 176,542 |
| Revenue Trend % | Â | 109.9% | 84.2% | 39... | |
Chapter 1 Solutions
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