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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Preparing Common Size Statements

The financial statements for Richardson Socks company follow.

Chapter 12, Problem 89PSB, Preparing Common Size Statements The financial statements for Richardson Socks company follow. , example  1

Chapter 12, Problem 89PSB, Preparing Common Size Statements The financial statements for Richardson Socks company follow. , example  2

Required:

  1. Prepare common size income statement to be used for horizontal analysis for Rechardson for 2017 and 2019 (in percentage terms, rounded to two decimal places ). Utilizes 2017 as the base year for both 2018 and 2019 . You do not to include the actual dollar amounts shown above.
  2. Indicate why Richordson’s net income interested between 2017 and 2019.
  3. Prepare common size balance sheet to be used for vertical analysis for 2019 and 2018 (in percentage term , rounded to two decimal places ). You do need to include actual dollar amount shown above.
  4. Determine wether the proportionate of dollar invested in the various categories of assets has changed significantly between 2018 and 2019 .
  5. Determine wether the proportionate of capital raised from the various liabilities categories and common stackholder’s equity has changed significantly between 2018 and 2019 .

Chapter 12, Problem 89PSB, Preparing Common Size Statements The financial statements for Richardson Socks company follow. , example  3

To determine

(a)

Common size analysis can be led in two different ways, i.e., vertical analysis and horizontal analysis. Vertical analysis alludes to the analysis of explicit details in connection to a base thing inside the equivalent money related period. For instance, in a critical position sheet, we can survey the extent of stock.

Prepare common size income statement to be used for horizontal analysis for Richardson socks comapny 2017 to 2019. Utilize 2017 as the base year for 2018 and 2019.

Explanation

In this calculation 1 formula is used

For 2019 year = 2019 amount2017 amount×100

To determine

(b)

Net income increase shows that what types of effect in the income statement, so increase the net income.

To discuss:

Why net income percentage increase from 2017 to 2019.

To determine

(c)

Balance sheet is the main statement of any business which shows the real figure of particular company, and after the company balance sheet company can analysis of any types like debt to equity ratio any many more.

To discuss:

Prepare common size statement of balance sheet to be used vertical analysis for 2018 and 2019.

To determine

(d)

Balance sheet is the main statement of any business which shows the real figure of particular company, and after the company balance sheet company can analysis of any types like debt to equity ratio any many more.

Company also identity that how much company invest in the different types of assets.

To discuss:

Indicate whether the proportion of dollars invested in the various categories of assets has changed significantly between 2018 to 2019.

To determine

(e)

Capital raised means company taking some amount of borrowing for the purpose of increase the profit amount also increase the company manufacturing or production.

To discuss:

How much amount of capital raised from the various categories of assets has changed significantly between 2018 to 2019.

To determine

(f)

An organization’s balance sheet, otherwise called an "announcement of financial position," uncovers the company’s assets, liabilities and owners' equity (total assets). The balance sheet, together with the salary proclamation and income explanation, make up the foundation of any organization’s financial.

To discuss:

Discuss the financial statement.

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Chapter 12 Solutions

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Ch-12 P-11DQCh-12 P-12DQCh-12 P-13DQCh-12 P-14DQCh-12 P-15DQCh-12 P-16DQCh-12 P-1MCQCh-12 P-2MCQCh-12 P-3MCQCh-12 P-4MCQCh-12 P-5MCQCh-12 P-6MCQCh-12 P-7MCQCh-12 P-8MCQCh-12 P-9MCQCh-12 P-10MCQCh-12 P-11MCQCh-12 P-12MCQCh-12 P-13MCQCh-12 P-14MCQCh-12 P-15MCQCh-12 P-16MCQCh-12 P-17MCQCh-12 P-18MCQCh-12 P-19MCQCh-12 P-20MCQCh-12 P-21MCQCh-12 P-22MCQCh-12 P-23MCQCh-12 P-24MCQCh-12 P-25MCQCh-12 P-26MCQCh-12 P-27MCQCh-12 P-28MCQCh-12 P-29MCQCh-12 P-30MCQCh-12 P-31MCQCh-12 P-32MCQCh-12 P-33MCQCh-12 P-34MCQCh-12 P-35MCQCh-12 P-36MCQCh-12 P-37MCQCh-12 P-38MCQCh-12 P-39MCQCh-12 P-40MCQCh-12 P-41MCQCh-12 P-42MCQCh-12 P-43MCQCh-12 P-44MCQCh-12 P-45MCQCh-12 P-46CECh-12 P-47CECh-12 P-48CECh-12 P-49CECh-12 P-50CECh-12 P-51CECh-12 P-52CECh-12 P-53CECh-12 P-54CECh-12 P-55CECh-12 P-56CECh-12 P-57BECh-12 P-58BECh-12 P-59BECh-12 P-60BECh-12 P-61BECh-12 P-62BECh-12 P-63BECh-12 P-64BECh-12 P-65BECh-12 P-66BECh-12 P-67BECh-12 P-68ECh-12 P-69ECh-12 P-70ECh-12 P-71ECh-12 P-72ECh-12 P-73ECh-12 P-74ECh-12 P-75ECh-12 P-76ECh-12 P-77ECh-12 P-78ECh-12 P-79ECh-12 P-80ECh-12 P-81ECh-12 P-82ECh-12 P-83ECh-12 P-84PSACh-12 P-85PSACh-12 P-86PSACh-12 P-87PSACh-12 P-88PSACh-12 P-89PSACh-12 P-90PSACh-12 P-91PSACh-12 P-92PSACh-12 P-93PSACh-12 P-84PSBCh-12 P-85PSBCh-12 P-86PSBCh-12 P-87PSBCh-12 P-88PSBCh-12 P-89PSBCh-12 P-90PSBCh-12 P-91PSBCh-12 P-92PSBCh-12 P-93PSBCh-12 P-94CCh-12 P-95.1CCh-12 P-95.2CCh-12 P-96.1CCh-12 P-96.2CCh-12 P-97.1CCh-12 P-97.2CCh-12 P-97.3CCh-12 P-97.4CCh-12 P-97.5CCh-12 P-97.6CCh-12 P-98.1CCh-12 P-98.2CCh-12 P-98.3CCh-12 P-99.1CCh-12 P-99.2CCh-12 P-99.3CCh-12 P-99.4CCh-12 P-99.5C

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