1.
Prepare a vertical analysis on the consolidated income statement for all three years and discuss the benefit in this analysis.
2.
Prepare a horizontal analysis on the consolidated income statement for two years and discuss the benefit in this analysis.
3.
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.
Compute net
5.
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.
Want to see the full answer?
Check out a sample textbook solutionChapter 12 Solutions
Pearson eText for Financial Accounting -- Instant Access (Pearson+)
- The role of financial statements analysis is to use financial reports prepared by companies combined with other information, to evaluate the past, current and potential performance and financial position of a company for the purpose of making investment, credit and other economic decisions. In relation to the above statements, analyze two types of economic decisions that a financial analyst could make from the financial statement s of a companyarrow_forwardWho will be a user of financial statements, and what will they be used for? Question 17 options: Lenders will use financial statements to decide whether to invest in a company. Investors will use financial statements to decide whether to lend money to a company. The marketing department is interested in the operating income figures in the financial statements. Managers will use financial statements to make decisions about their company.arrow_forwardASSIGNMENT: REVIEW QUESTIONS Direction: Answer comprehensively the following questions. 1. Explain the following statement, "While the statement of financial position can be thought of as a snapshot of a firm's financial position at a point in time, the income statement reports on operations over a period of time." 2. Financial statements are based on financial reporting standards and are audited by CPA firms. Do investors need to worry about the validity of those statements? Explain your answer. 3. How is income statement related to the statement of financial position? 4. Comment on why inflation may restrict the usefulness of the statement of financial position as normally presented.arrow_forward
- Providing information about the performance and financial position of companies so that users can make economic decisions best describes the role of: Select one: O a. Financial reporting. O b. Financial statement analysis. O c. Auditing.arrow_forwardCompanies need to report both monetary and nonmonetary data and information. A. Define these two terms and provide examples of each. B. Discuss what sources are available that provide companies with both types of data and information.arrow_forwardFinancial statement analysis is the process of analysing a company's financialstatements for decision-making purposes. External stakeholders use it to understand the overall health of an organization as well as to evaluate financial performance and business value. Internal constituents use it as a monitoring tool for managing the finances. Differentiate the three main types of financial statements: the balance sheet, income statement and cash flow statement??arrow_forward
- The return on total assets is the focus of analysts, creditors, and other users of financial statements. 1. How is the return on total assets computed? 2. What does this important ratio reflect? 3. Return on total assets can be separated into two important components. Write the formula to separate the return on total assets into its two basic components. 4. Explain how these components of the return on total assets are helpful to financial statement users for business decisions.arrow_forwardFinancial statement analysis is the process of analyzing a company's financialstatements for decision-making purposes. External stakeholders use it to understand the overall health of an organization as well as to evaluate financial performance and business value. Internal constituents use it as a monitoring tool for managing finances. Differentiate the three main types of financial statements: the balance sheet, income statement, and cash flow statement ???arrow_forwardAnalysts gather additional information to provide insight about management’s financial statements. Discuss the importance of doing the following: considering the financial reporting history of the company. investigating large and unusual changes in reported items.arrow_forward
- Question: When preparing financial statements, which involve the culmination of various accounting principles and concepts, the process is crucial in portraying a company's financial health and performance. Among the key components, the income statement and the balance sheet stand as fundamental snapshots. The income statement delineates a company's revenues, expenses, and ultimately its profitability over a specific period, employing either the accrual basis or cash basis accounting. On the other hand, the balance sheet provides an overview of a company's assets, liabilities, and shareholders' equity at a given point in time, adhering to the accounting equation where assets are equal to liabilities plus shareholders' equity. Furthermore, the matching principle necessitates that expenses be recorded in the same period as the related revenues they helped generate, facilitating a more accurate representation of the company's financial performance. In the context of accounting…arrow_forwardA company reports accounting data in its financial statements. This data is used for financial analyses that provide insights into a company’s strengths, weaknesses, performance in specific areas, and trends in performance. These analyses are often used to compare a company’s performance to that of its competitors or to its past or expected future performance. Such insight helps managers and analysts improve their decision making. Consider the following scenario: You work as an analyst at a credit-rating agency, and you are comparing firms in the construction and engineering sector. One company in the portfolio of companies you are analyzing is a Chinese firm. This firm stands out in the ratio analysis, because the company’s financial ratios are substantially lower than identical financial ratios of the other firms in the sector. You do not dissect the results of the ratio analysis and report this firm as an under-performing company. Which of the following statements about…arrow_forwardStudying AIS helps students understand business processes from an accounting perspective. Which of the following activities would commonly be associated with the financing process? Selling goods and services on credit Issuing equity securities Making payments to vendors Hiring employees to work in the finance departmentarrow_forward
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage LearningPrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegePkg Acc Infor Systems MS VISIO CDFinanceISBN:9781133935940Author:Ulric J. GelinasPublisher:CENGAGE L