Interpreting and Analyzing Financial Statements
Interpreting and Analyzing Financial Statements
- ISBN 13:
9780130082169
- ISBN 10:
0130082163
- Edition: 3rd
- Format: Paperback
- Copyright: 01/01/2004
- Publisher: Pearson College Div
- Newer Edition
Rent
Sorry, this item is currently unavailable.
Free Shipping On Every Order
Note: Supplemental materials are not guaranteed with Rental or Used book purchases.
Extend or Purchase Your Rental at Any Time
Need to keep your rental past your due date? At any time before your due date you can extend or purchase your rental through your account.
Summary
Designed for use with Harrison and Horngrens'Financial Accounting , 4th Edition orany financial principles accounting volume, thisactivity workbook helps readers analyze real company financial statement information and helps prepare readers for a capstone project creating a comprehensive financial statement analysis. Each activity concentrates on only one aspect of the analysis and uses data from well-known corporations to pique readers' interest and add relevancy. The workbook provides an introduction to interpretation and analysis, plus guidelines for analyzing the balance sheet, analyzing the income statement, analyzing the statement of cash flows, further ratio analysis, interpreting and understanding specific accounts, comprehensive review, corporate analysis.
Table of Contents
Read morePreface | p. xiii |
Introduction to Interpretation and Analysis | |
Corporations Featured in Chapter 1 | p. 1 |
Examining Total Assets: Comparing Companies | p. 3 |
Examine the range and magnitude of total assets | |
Solve for unknowns in the accounting equation | |
Identify information provided by the balance sheet | |
Gap Inc. | |
General Motors | |
Home Depot | |
Oracle | |
Examining Assets: Comparing Companies | p. 4 |
Examine asset components | |
Solve for unknown asset components | |
Understand assets are recorded at historical cost | |
Apple Computer | |
IBM | |
Microsoft | |
Examining How Assets Are Financed: Comparing Companies | p. 5 |
Solve for unknown liability and stockholder equity components | |
Determine the dominant method of financing assets | |
Apple Computer | |
IBM | |
Microsoft | |
Examining Net Sales: Comparing Companies | p. 6 |
Examine the range and magnitude of net sales | |
Solve for unknown income statement components | |
Identify information provided by the income statement | |
Intel | |
Royal Caribbean Cruises | |
Wal-Mart | |
Walt Disney | |
Ratio Analysis: Current Ratio | p. 7 |
Understand the information provided by the current ratio | |
Identify the expected range and whether an increasing or decreasing trend is usually preferred | |
Gap Inc. | |
General Motors | |
Home Depot | |
Oracle | |
Ratio Analysis: Debt Ratio | p. 8 |
Understand the information provided by the debt ratio | |
Identify the expected range and whether an increasing or decreasing trend is preferred | |
Citigroup | |
Hewlett-Packard | |
Johnson and Johnson | |
Wal-Mart | |
Ratio Analysis: Return on Sales (ROS) | p. 9 |
Understand the information provided by the return-on-sales ratio | |
Identify the expected range and whether an increasing or decreasing trend is preferred | |
Gap Inc. | |
General Motors | |
Home Depot | |
Oracle | |
Ratio Analysis: Asset Turnover | p. 10 |
Understand the information provided by the asset turnover ratio | |
Identify the expected range and whether an increasing or decreasing trend is preferred | |
Gap Inc. | |
General Motors | |
Home Depot | |
Oracle | |
Ratio Analysis: Return on Assets (ROA) | p. 11 |
Understand the information provided by the return-on-assets ratio | |
Identify the expected range and whether an increasing or decreasing trend is preferred | |
Gap Inc. | |
General Motors | |
Home Depot | |
Oracle | |
Test Your Understanding: A Review of Ratio Analysis | p. 12 |
Oracle | |
Trend Analysis: Income Statement | p. 13 |
Prepare a trend analysis and understand the information provided | |
Sprint | |
Trend Analysis: Balance Sheet | p. 14 |
Prepare a trend analysis and understand the information provided | |
Best Buy | |
Common-size Statement Analysis: Income Statement | p. 15 |
Prepare common-size statements and understand the information provided | |
ATandT | |
WorldCom | |
Sprint | |
Common-size Statement Analysis: Balance Sheet | p. 16 |
Prepare common-size statements and understand the information provided | |
Best Buy | |
eBay | |
Sun Microsystems | |
Test Your Understanding: A Review of Trend Analysis and Common-size Statements | p. 17 |
Hershey | |
Gucci Group NV | |
Internet Research: Using Hoover's Online, The Business Network | p. 18 |
Use the Internet to research descriptive and financial information for a company | |
Hoover's, Inc. | |
Analyzing the Balance Sheet | |
Corporations Featured in Chapter 2 | p. 19 |
Strategies for Analyzing the Balance Sheet | p. 21 |
Develop strategies for analyzing the balance sheet | |
Understand what an increase or a decrease in an account indicates | |
Outback Steakhouse | |
Preparing and Interpreting a Classified Balance Sheet: Assets | p. 22 |
Practice classifying asset account titles | |
Interpret parentheses and minus signs reported on the financial statements | |
Prepare a classified balance sheet using asset accounts | |
Analyze the balance sheet | |
Sears | |
Preparing and Interpreting a Classified Balance Sheet: Liabilities and Stockholders' Equity | p. 24 |
Practice classifying account titles | |
Interpret parentheses and minus signs reported on the financial statements | |
Prepare a classified balance sheet using liabilities and stockholders' equity accounts | |
Analyze the balance sheet | |
Sears | |
Trend Analysis | p. 26 |
Prepare a trend analysis and understand the information provided | |
LSI Logic | |
Common-size Statements | p. 28 |
Prepare common-size statements and understand the information provided | |
IHOP | |
McDonald's | |
Starbucks | |
Industry Norms: Eating Places | p. 29 |
Compare industry norms with a company from within the industry | |
Starbucks | |
Analysis of Southwest Airlines | p. 30 |
Understand and interpret amounts reported on the balance sheet | |
Southwest Airlines | |
Analysis of America Online, Inc. | p. 32 |
Understand and interpret amounts reported on the balance sheet | |
American Online | |
Test Your Understanding: Analyzing the Balance Sheet | p. 34 |
Understand and interpret amounts reported on the balance sheet | |
Coca-Cola | |
Nike | |
Walt Disney | |
Yahoo! | |
Internet Research: Using a Company Web Site | p. 36 |
Use the Internet to research company information | |
Understand and interpret amounts reported on the balance sheet | |
Home Depot | |
Analyzing the Income Statement | |
Corporations Featured in Chapter 3 | p. 37 |
Strategies for Analyzing the Income Statement | p. 39 |
Understand the relationship between the trend for net sales and the trend for other items on the income statement | |
Develop strategies for analyzing the income statement | |
Guess? | |
Preparing and Interpreting a Multi-step Income Statement | p. 40 |
Practice classifying account titles | |
Interpret parentheses and minus signs reported on the financial statements | |
Prepare a multi-step income statement | |
Interpret the income statement | |
Boeing | |
Analyzing the Income Statement: Using PepsiCo | p. 43 |
Understand the relationship between the trend for sales and the trend for other items on the income statement | |
Use ratios to further understanding of amounts reported on the financial statements | |
Understand nonrecurring items may distort certain computations | |
PepsiCo | |
Trend Analysis: Using the Best Buy Company | p. 45 |
Prepare a trend analysis and understand the information provided | |
Best Buy | |
Common-size Statements | p. 47 |
Prepare common-size statements and understand the information provided | |
AMR (American Airlines) | |
Southwest Airlines | |
Vanguard Airlines | |
Industry Norms: Air Transportation, Scheduled | p. 48 |
Compare industry norms to a company from within the industry | |
Southwest Airlines | |
Analysis of Yahoo! Corporation | p. 49 |
Understand and interpret amounts reported on the income statement | |
Yahoo! | |
Analysis of Apple Computer | p. 50 |
Understand and interpret amounts reported on the income statement | |
Apple Computer | |
Test Your Understanding: Analyzing the Income Statement | p. 51 |
Understand and interpret amounts reported on the income statement | |
Anheuser-Busch | |
Merck | |
Microsoft | |
Wal-Mart | |
Internet Research: Using a Company Web Site | p. 53 |
Use the Internet to research company information | |
Understand and interpret amounts reported on the income statement | |
PepsiCo | |
Analyzing the Statement of Cash Flows | |
Corporations Featured in Chapter 4 | p. 55 |
Operating Activities | p. 56 |
Understand operating activities on the statement of cash flows | |
Procter and Gamble | |
Investing Activities | p. 59 |
Understand investing activities on the statement of cash flows | |
Procter and Gamble | |
Financing Activities | p. 61 |
Understand financing activities on the statement of cash flows | |
Procter and Gamble | |
Operating, Investing, or Financing? | p. 63 |
Identify operating, investing, and financing activities on the statement of cash flows | |
Operating, Investing, or Financing? | p. 64 |
Identify operating, investing, and financing activities on the statement of cash flows | |
Understand the amount reported and whether the transaction results in an inflow or an outflow of cash | |
List Operating, Investing, and Financing Activities | p. 65 |
List typical operating, investing, and financing activities for both small and large companies | |
Sears | |
Wal-Mart | |
Analysis of Pfizer Incorporated | p. 66 |
Understand and interpret amounts reported on the statement of cash flows | |
Pfizer | |
Analysis of Deckers Outdoor Corporation | p. 68 |
Understand and interpret amounts reported on the statement of cash flows | |
Deckers Outdoor | |
Test Your Understanding: Statement of Cash Flows | p. 69 |
Understand and interpret amounts reported on the statement of cash flows | |
Home Depot | |
Johnson and Johnson | |
Vanguard Airlines | |
Internet Research: Using a Company Web Site | p. 70 |
Use the Internet to research company information | |
Understand and interpret amounts reported on the statement of cash flows | |
General Motors | |
Further Ratio Analysis | |
Corporations Featured in Chapter 5 | p. 71 |
Researching Industry Norms | p. 73 |
Introduce the concept of industry norms and how to research these averages | |
Acid-test (Quick) Ratio | p. 74 |
Understand the information provided and the expected range of the Acidtest Ratio | |
Home Depot | |
IHOP | |
PepsiCo | |
Procter and Gamble | |
Days' Sales in Receivables | p. 75 |
Understand the information provided and the expected range of the days' sales in receivables ratio | |
Kroger | |
Oracle | |
PepsiCo | |
Procter and Gamble | |
Accounts Receivable Turnover | p. 76 |
Understand the information provided and the expected range of the accounts receivable turnover ratio | |
Kroger | |
Oracle | |
PepsiCo | |
Procter and Gamble | |
Gross Margin Percentage | p. 77 |
Understand the information provided by the gross margin percentage | |
Understand that the expected range varies by industry | |
Bristol-Myers Squibb | |
General Motors | |
Kroger | |
May Department Stores | |
Inventory Turnover | p. 78 |
Understand the information provided by the inventory turnover ratio | |
Understand that the expected range varies by industry | |
Deckers Outdoor | |
General Motors | |
Home Depot, Kroger | |
Times-Interest-Earned | p. 79 |
Understand the information provided and the expected range of the times-interest-earned ratio | |
General Motors | |
May Department Stores | |
Oracle | |
PepsiCo | |
Return on Assets (ROA) | p. 80 |
Understand the information provided and the expected range of the rate of return on total assets ratio | |
General Motors | |
Home Depot | |
IHOP | |
Oracle | |
Return on Equity (ROE) | p. 81 |
Understand the information provided and the expected range of the rate of return on common stockholders' equity | |
Home Depot | |
Oracle | |
PepsiCo | |
Procter and Gamble | |
Earning Per Share (EPS) | p. 82 |
Understand the information provided by the earnings per share ratio | |
Deckers Outdoor | |
General Motors | |
IHOP | |
Procter and Gamble | |
Earning Per Share (EPS) | p. 83 |
Understand that caution should be used when comparing earnings per share between companies | |
Price/Earnings (P/E) Ratio | p. 84 |
Understand the information provided by the price/earnings ratio | |
Bristol-Myers Squibb | |
Gap Inc. | |
General Motors | |
Home Depot | |
IHOP | |
May Department Stores | |
Oracle | |
PepsiCo | |
Procter and Gamble | |
Dividend Yield | p. 85 |
Understand the information provided and the expected range of the dividend yield ratio | |
Bristol-Myers Squibb | |
Gap Inc. | |
General Motors | |
Home Depot | |
IHOP | |
May Department Stores | |
Oracle, PepsiCo | |
Procter and Gamble | |
Book Value Per Share | p. 86 |
Understand the information provided and the expected range of the book value per share of common stock | |
Understand the difference between book value and market value per share | |
Coca-Cola | |
Deckers Outdoor | |
General Motors | |
Home Depot | |
IHOP | |
Oracle | |
Procter and Gamble | |
Test Your Understanding: A Review of Further Ratio Analysis | p. 87 |
Internet Research: Using the Fortune Magazine Web Site | p. 89 |
Use the Fortune Web site to research and compare return on sales, return on assets, and return on equity between companies within the same industry | |
Wal-Mart | |
Interpreting and Understanding Specific Accounts | |
Corporations Featured in Chapter 6 | p. 91 |
Cash and Cash Equivalents | p. 92 |
Reinforce understanding of cash and cash equivalents | |
Intel | |
Short-term Investments | p. 93 |
Reinforce understanding of amounts reported on the financial statements for short-term investments | |
Accounts Receivable | p. 94 |
Reinforce understanding of amounts reported on the financial statements for accounts receivable | |
Ethics Affecting Financial Statement Amounts: Accounts Receivable | p. 95 |
Understand the effect ethical decisions have on amounts reported on the financial statements | |
Inventory | p. 96 |
Reinforce understanding of amounts reported on the financial statements for inventory as a result of using the LIFO cost-flow assumption | |
General Electric | |
Ethics Affecting Financial Statement Amounts: Inventory | p. 97 |
Understand the effect ethical decisions have on amounts reported on the financial statements | |
Property, Plant, and Equipment | p. 98 |
Reinforce understanding of property, plant, and equipment amounts reported on the financial statements | |
Long-term Investments | p. 99 |
Reinforce understanding of amounts reported on the financial statements for long-term investments classified as available-for-sale securities | |
Coca-Cola | |
IBM | |
Current and Long-term Liabilities | p. 100 |
Reinforce understanding of amounts reported on the financial statements for current and long-term liabilities | |
Stockholders' Equity | p. 101 |
Reinforce understanding of amounts reported on the financial statements for stockholders' equity | |
Coca-Cola | |
Current Market Interest Rates | p. 102 |
Benchmark current market rates and understand why they differ | |
Examining Bond Yields | p. 103 |
Understand why bond yields differ | |
Examining the Bond Market | p. 104 |
Understand why bonds sell at a premium, at par, or at a discount | |
Sprint | |
Trump | |
Examining the Dow Jones Industrial Average: Using The Wall Street Journal | p. 105 |
Identify the companies that comprise the Dow Jones Industrial Average (DJIA) | |
Understand how the DJIA is computed | |
Understand the information provided by the average | |
How to Read Stock Quotes: Using The Wall Street Journal | p. 107 |
Locate and understand the stock quote information reported in The Wall Street Journal | |
American Online | |
Best Buy | |
PepsiCo | |
Following the Stock Market: Using The Wall Street Journal or the Internet | p. 108 |
Follow the stock market quotes for three companies and the Dow Jones Industrial Average (DJIA) for four weeks | |
Understand market value per share | |
Internet Research: Using the Internet to Research Stock Information | p. 110 |
Use the Internet to research stock quotes and historical stock information for specific companies | |
Use the Internet to research historical information for the Dow Jones Industrial Average | |
Microsoft | |
Oracle | |
Comprehensive Review | |
Corporations Featured in Chapter 7 | p. 111 |
Transactions Affecting Total Assets | p. 112 |
Review the effect of various transactions on total assets | |
Transactions Affecting Total Liabilities | p. 113 |
Review the effect of various transactions on total liabilities | |
Transactions Affecting Total Stockholders' Equity | p. 114 |
Review the effect of various transactions on total stockholders' equity | |
Transactions Affecting Net Income | p. 115 |
Review the effect of various transactions on net income | |
Which Financial Statement? | p. 116 |
Reinforce understanding of the information provided by each financial statement | |
Financial Statement Preparation | p. 117 |
Apply the revenue recognition and the matching principles | |
Differentiate between accrual accounting and cash accounting | |
Prepare a multi-step income statement, the statement of retained earnings, a classified balance sheet, and the operating activity section of the statement of cash flows | |
Test Your Understanding: Comprehensive Analysis | p. 119 |
Analyze the income statement, the balance sheet, and the statement of cash flows | |
Prepare a statement of retained earnings | |
LSI Logic | |
Test Your Understanding: Comprehensive Analysis | p. 123 |
Analyze the income statement, the balance sheet, and the statement of cash flows | |
Prepare a statement of retained earnings | |
Royal Caribbean Cruises | |
Internet Research: Using the EDGAR Database | p. 127 |
Use the EDGAR Database to research financial statements | |
Ford Motor Company | |
Corporate Analysis | |
Corporate Analysis Purpose | p. 129 |
Part I: Tell Me About Your Company | p. 130 |
Use a variety of resources to research a corporation | |
Prepare a well-written paper describing your corporation | |
Part II: Prepare Financial Statements in Condensed Format and a Written Analysis | p. 131 |
Use resources available to obtain financial statements for the past four fiscal years | |
Prepare a classified balance sheet, multi-step income statement, and the statement of cash flows using the condensed format provided | |
Prepare trend analyses and common-size statements | |
Prepare a well-written analysis of each financial statement using appropriate business/accounting vocabulary | |
Part III: Compute Ratios and Compare to Industry Norms | p. 132 |
Research the primary SIC (Standard Industrial Classification) Code for your company | |
Use resources available to obtain industry averages for commonly used ratios | |
Compare company ratio results to industry averages | |
Prepare a well-written report summarizing the ratio analysis using appropriate accounting/business vocabulary | |
Part IV: Would You Advise a Friend to Invest in this Company? | p. 133 |
Base a recommendation on previous research, analysis, and sound reasoning | |
Prepare a well-written analysis using appropriate business/accounting vocabulary | |
Corporate Analysis Forms | p. 134 |
Table of Contents provided by Syndetics. All Rights Reserved. |
Supplemental Materials
Read moreWhat is included with this book?
The New copy of this book will include any supplemental materials advertised. Please check the title of the book to determine if it should include any access cards, study guides, lab manuals, CDs, etc.
The Used, Rental and eBook copies of this book are not guaranteed to include any supplemental materials. Typically, only the book itself is included. This is true even if the title states it includes any access cards, study guides, lab manuals, CDs, etc.
Excerpts
Read moreWhile this book can be used to supplement any financial accounting text, the activities have been designed to accompanyFinancial Accounting,5th edition, by Walter T. Harrison, Jr., and Charles T. Horngren (Prentice Hall, 2004). WHY THESE ACTIVITIES WERE DEVELOPED When I first started assigning a comprehensive financial statement analysis as a capstone project, it became evident many students didn't know where to begin. They were overwhelmed by all of the numbers and felt frustrated. As a result, this series of preliminary activities was developed to prepare students for the capstone project. Each activity concentrates on only one aspect of financial statement analysis. After completing the preliminary activities, students feel confident in their strategies and ability to successfully complete a comprehensive financial statement analysis. USING DATA FROM WELL-KNOWN CORPORATIONS These activities use financial data from companies familiar to students. The actual numbers make the class relevant and more interesting to students. Because students are already familiar with the companies, they more easily grasp the material and remember the concepts. FOCUS IS ON INTERPRETING AND ANALYZING Most amounts are provided and calculations are kept to a minimum so students can focus their time and attention on interpretation and analysis. Fifteen minutes on average is required for completion of each activity. RATIO ANALYSIS Activities point out the significant role ratios have in analyzing financial statements. Students acquire a "feel" for the expected range and magnitude of the ratios and identify whether a high or low ratio is usually preferred. Commonly used ratios are studied. TREND PERCENTAGES AND COMMON-SIZE STATEMENT ANALYSIS Trend percentages are used to evaluate both the income statement and the balance sheet. Emphasis is placed on comparing the rate of increase or decrease of various account classifications within each financial statement. Common-size statements are used to compare companies of different size. EXCEL SPREADSHEETS Financial statements are prepared and analyzed using Excel spreadsheets. To reinforce understanding, students are required to prepare formulas to create common-size statements, trend percentages, and ratios. A comparative analysis of two companies is used to demonstrate the effectiveness of Excel formulas. An Excel graph is created in one activity and then pulled into a PowerPoint presentation. Excel techniques introduced provide valuable tools for successful completion of the comprehensive analysis project and presentation in Chapter 10. INTERNET RESEARCH Internet activities are used to introduce a comprehensive set of websites offering financial information while also requiring financial statement analysis. These Internet websites provide valuable sources of information for successful completion of the comprehensive analysis project in Chapter 10. OTHER RESEARCH Other research activities require readingThe Wall Street Journal,calling a local bank, or utilizing library resources that are available. The final chapter contains a corporate analysis that requires in-depth research of a company. These research activities expose students to a variety of resources available to help with gathering financial information. FOUR-YEAR COMPARISON Financial statements are introduced using four years of comparative information. Each line item is studied and the student develops an overall strategy to analyze the financial statement. Questions lead to increased understanding and highlight important trends. ETHICAL ISSUES Ethical issues are incorporated into a number of the activities. RANGE AND MAGNITUDE OF AMOUNTS Companies are carefully selected so students get a "feel" for the range and magnitude of expected amounts and ratios in the corporate world.
Write a Review
Currently unavailable