Identify And Compute Ratios For Analyzing A Company's Profitability

Submitted By negotiation1
Words: 8529
Pages: 35
Open Document
CHAPTER 2
A Further Look at Financial Statements
Study Objectives
1.
2.
3.

Identify the sections of a classified balance sheet.
Identify and compute ratios for analyzing a company’s profitability.
Explain the relationship between a retained earnings statement and a statement of stockholders’ equity.
Identify and compute ratios for analyzing a company’s liquidity and solvency using a balance sheet.
Use the statement of cash flows to evaluate solvency.
Explain the meaning of generally accepted accounting principles.
Discuss financial reporting concepts.

4.
5.
6.
7.

Summary of Questions by Study Objectives and Bloom’s Taxonomy
Item

SO

BT

Item

SO

BT

Item

SO

BT

Item

SO

BT

Item

SO

BT

K
C
K
K

14.
15.
16.
17.

7
7
7
6

C
C
C
C

18.
19.
20.

7
7
1

C
C
C

9.
10.

7
7

K
K

11.

7

K

Do It! Review Exercises
3.
4, 5
K
4.
Exercises

7

K

10.
11.

4
4, 5

AP
AP

12.
13.

7
7

K
C

7.

2, 4,
5

8.

6, 7

E

AP

2, 4,
5

8.

6, 7

E

AP

Questions
1.
2.
3.
4.
5.

1
1
1
1
1

K
K
C
C
K

6.
7.
8.
9.

2, 4, 5
2, 4, 5
4
4, 5

C
K
C
C

10.
11.
12.
13.

4, 5
2, 4, 5
6
6, 7

Brief Exercises
1.
2.
3.

1
1
2

K
AP
AP

4.
5.
6.

3
4
4, 5

K
AP
AP

1.

1

AP

2.

1

AP

1.
2.
3.

1
1
1

AP
AP
AP

4.
5.
6.

1
1
1

AP
AP
AP

1.

1

AP

3.

1, 3

AP

2.

1.
2.

1, 3

1
1, 3

AP

AP
AP

4.

3.
4.

2, 4,
5

AN

1, 3

AP

2, 4,
5

Copyright © 2011 John Wiley & Sons, Inc.

AN

7.
8.

6
7

K
K

7.
2
AP
8. 1, 3, 4 AP
9.
4
AP
Problems: Set A
5.

2, 4,
5
AP
6. 2, 4,
5
AP
Problems: Set B
5. 2, 4,
5
AP
6. 2, 4,
5
AP

Kimmel Accounting, 4/e Solutions Manual

7.

(For Instructor Use Only)

2-1

ASSIGNMENT CHARACTERISTICS TABLE
Problem
Number

Difficulty
Level

Time
Allotted (min.)

Simple

Description

10–20

1A
2A

Prepare financial statements.

Moderate

20–30

3A

Prepare financial statements.

Moderate

20–30

4A

Compute ratios; comment on relative profitability, liquidity, and solvency.

Moderate

20–30

5A

Compute and interpret liquidity, solvency, and profitability ratios. Simple

10–20

6A

Compute and interpret liquidity, solvency, and profitability ratios.

Moderate

15–25

7A

Compute ratios and compare liquidity, solvency, and profitability for two companies.

Moderate

15–25

8A

Comment on the objectives and qualitative characteristics of financial reporting.

Simple

10–20

1B

Prepare a classified balance sheet.

Simple

10–20

2B

Prepare financial statements.

Moderate

20–30

3B

Prepare financial statements.

Moderate

20–30

4B

Compute ratios; comment on relative profitability, liquidity, and solvency.

Moderate

20–30

5B

Compute and interpret liquidity, solvency, and profitability ratios. Simple

10–20

6B

Compute and interpret liquidity, solvency, and profitability ratios.

Moderate

15–25

7B

Compute ratios and compare liquidity, solvency, and profitability for two companies.

Moderate

15–25

8B

2-2

Prepare a classified balance sheet.

Comment on the objectives and qualitative characteristics of accounting information.

Simple

10–20

Copyright © 2011 John Wiley & Sons, Inc.

Kimmel Accounting, 4/e Solutions Manual

(For Instructor Use Only)

ANSWERS TO QUESTIONS
1.

A company’s operating cycle is the average time that is required to go from cash to cash in producing revenue.

2.

Current assets are assets that a company expects to convert to cash or use up within one year of the balance sheet date or the company’s operating cycle, whichever is longer. Current assets are listed in the order in which they are
Show More

Related Documents: Identify And Compute Ratios For Analyzing A Company's Profitability

research paper

Research Paper 1 How safe are the government facilities? Rebecca Leon Empire State University Business Continuity Planning and Disaster Recovery Diane Delucia April 01, 2015 Research Paper 2 On March 9th 2015 an email was sent out to every Army…

Words 1122 - Pages 5

IT Research Paper

Research Paper MELKIA WATERS Mwaters17@capellauniversity.edu IT3006 PROF. JULIA KRUMMEN Nov. 10, 2013 Identifying Improved Methodology to Procure HIT Software Benefits Users Introduction Researchers conducted a study conducted at The University of Utah Healthcare system (comprising of 3 major hospitals) on the usability of their health information technology (HIT) software. Evaluators found 60 usability problems and 233 heuristic violations (Guo et al., 2011). Heuristic is defined by Oxford Dictionaries…

Words 1892 - Pages 8

Research Paper

25099373 CNF15_3 Research Methods Research Proposal Word Count: 1210 A look into the Memory Retention: Can stimulants increase a person’s memory? A quantitative research proposal. For this research proposal, memory will be looked into to see whether a person’s memory can be increased via the intake of stimulants. This quantitative research will then look into whether there are any future benefits in consuming stimulants if memory is found to be increased. There is already research similar in nature…

Words 1359 - Pages 6

Research Paper

Research papers are a common type of paper for students to write, especially when they are attending college. These papers require students to perform research, such as utilizing primary and secondary sources to draw new conclusions. For students who have not written this type of paper before, it may seem daunting. There are many free sample research papers online for those who want to see how to structure their paper and other details.Diane Hacker, an author who writes manuals for students writing…

Words 307 - Pages 2

Research Paper

Research Paper EDUC 600 Pamela Noble Dr. Albright Liberty University Abstract Billions of dollars are spent every year on psychologist, psychiatrist, and counselors only to discover that one of the key elements missing in their child is resiliency. Resiliency for the purpose of this study is defined as the appropriate personality such as strength and positive adaptation that help a person or family cope with stress or life difficulties, increasing the likelihood of…

Words 514 - Pages 3

Research Paper

Research Paper How does an imposed requirement of regularly identifying exposure to operational risk benefit an insurance company? Executive Summary The topic of this research paper is how an imposed requirement of regularly identifying exposure to operational risk benefits an insurance company. Risks occur naturally in all business, but if risk is not controlled, there are plenty of consequences that can arise. Insurance companies deal with risk everyday, ranging from fraud, car theft, health…

Words 2609 - Pages 11

Research Paper

Comparison of the Sciences SSC101 Research Assignment Module 7 Saint Leo University December 08, 2012 The three social sciences below are defined as according to the Merriam-Webster on line dictionary. www.merriam-webster.com Anthropology 1: the science of human beings; especially : the study of human beings and their ancestors through time and space and in relation to physical character, environmental and social relations, and culture 2: theology dealing with the origin,…

Words 2578 - Pages 11

Research Paper

amount Americans drink today by three and you'll have an idea what much of the nineteenth century was like.” So how does someone become an alcoholic? This has to do with a combination of genetic, physiological, psychological and social factors. Research have discovered that children of alcoholics are four times more likely to become alcoholics themselves. Children of alcoholic parents are raised in the environment where drinking is okay and they tend to pick up the drinking habit from their parents…

Words 1766 - Pages 8

Research paper

groups, sexual preferences, sex, size, etc. So to fathom being in a society where it is essentially a "free for all" towards being prejudice, or genuinely prejudice towards these types of groups is very hard to imagine. Prior to doing any definite research, I thought I had a pretty clear idea on how exactly equal opportunity could both benefit, and hurt today’s workplace. As I was reading “Advantages & Disadvantages of Equal Opportunity Employment” (Casey Reader) a short online article by Casey Reader…

Words 1332 - Pages 6

Research Paper

you commit yourself to. This way of thinking really reflects on the type of writing process I endure. While writing I really focus on how I want to identify myself, what questions I wish to discover, and how this idea might change me. To begin my paper I use an outline. On this outline at the top of the page I write my main topic that I wish to write about. After I have created the topic, I then write a list of ideas that relate to what I want to talk about. Out of the ten ideas I create I choose…

Words 2972 - Pages 12