Chapter 13 PowerPoint 1-31-17

Time
Now, let’s look at
some ways to use
horizontal analysis.
McGraw-Hill/Irwin
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Slide 13-11
CLOVER CORPORATION Comparative Balance Sheets
$ 70,000 $ 50,000 $ 20,000
40.0
Long-term liabilities:
Bonds payable, 8%
75,000 80,000 (5,000)
(6.3)
Total liabilities
$ 145,000 $ 130,000 $ 15,000
11.5
Shareholders' equity:
Buildings and equipment, net
120,000 85,000
Total property and equipment $ 160,000 $ 125,000
Total assets
$ 315,000 $ 289,700
* Percent rounded to first decimal point.
Slide 13-1
13 Financial Statements Analysis and Interpretation
McGraw-Hill/Irwin
© The McGraw-Hill Companies, Inc., 2003
Slide 13-2
Basics of Analysis
Application of analytical
Building Blocks of Analysis
Ability to meet short-term
obligations and to efficiently generate revenues
Liquidity and
Efficiency
Solvency
Ability to generate future revenues and meet long-term
© The McGraw-Hill Companies, Inc., 2003
Slide 13-5
Information for Analysis
Income Statement Balance Sheet
Statement of Changes in Stockholders’ Equity
Statement of Cash Flows
120,000 85,000 35,000
41.2
Total property and equipment $ 160,000 $ 125,000 $ 35,000
28.0
Total assets
$ 315,000 $ 289,700 $ 25,300
8.7
* Percent rounded to first decimal point.
Internal Users Managers Officers
Internal Auditors
McGraw-Hill/Irwin
External Users Shareholders
Lenders Customers
© The McGraw-Hill Companies, Inc., 2003
Slide 13-4
Assets
Current assets:
Cash and equivalents
$ 12,000 $ 23,500 $ (11,500)
(48.9)
Accounts receivable, net
60,000 40,000 20,000
50.0
Inventory
80,000 100,000 (20,000)
Inventory
80,000 100,000
Prepaid expenses Total current assets
$12,003,000–0 $23,51,02000= $(11,500)
$ 155,000 $ 164,700
Property and equipment: Land
($11,50400,0÷00$23,5400,00)00× 100% = 48.9%
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable
$ 67,000 $ 44,000 $ 23,000
52.3
Notes payable3,000来自6,000 (3,000)
(50.0)
Total current liabilities
(20.0)
Prepaid expenses
3,000
1,200 1,800
150.0
Total current assets
$ 155,000 $ 164,700 $ (9,700)
(5.9)
Property and equipment:
Land
40,000 40,000
-
0.0
Buildings and equipment, net
comparison.
McGraw-Hill/Irwin
Intracompany Competitor Industry Guidelines
© The McGraw-Hill Companies, Inc., 2003
Slide 13-7
Tools of Analysis
Horizontal Analysis
Preferred stock
20,000 20,000
-
0.0
Common stock
60,000 60,000
-
0.0
Additional paid-in capital
10,000 10,000
-
0.0
Total paid-in capital
McGraw-Hill/Irwin
© The McGraw-Hill Companies, Inc., 2003
Slide 13-16
Now, let’s review the dollar and percent changes for the liabilities and shareholders’ equity accounts.
December 31,
2002
Assets
Current assets:
Cash and equivalents
$ 12,000
Accounts receivable, net
60,000
Inventory
80,000
Prepaid expenses
3,000
Total current assets
Slide 13-9
Tools of Analysis
Using key relations among financial statement items
McGraw-Hill/Irwin
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Slide 13-10
Horizontal Analysis
McGraw-Hill/Irwin
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Slide 13-15
CLOVER CORPORATION
Comparative Balance Sheets
December 31,
Dollar Percent
2002
2001 Change Change*
Comparing a company’s financial condition and performance across time
McGraw-Hill/Irwin
Time
© The McGraw-Hill Companies, Inc., 2003
Slide
13-8
V
Tools of Analysis
McGraw-Hill/Irwin
© The McGraw-Hill Companies, Inc., 2003
Slide 13-17
CLOVER CORPORATION
Comparative Balance Sheets
December 31,
Dollar Percent
2002
2001 Change Change*
Percent Change
=
Dollar Change Base Period Amount
×
100%
McGraw-Hill/Irwin
© The McGraw-Hill Companies, Inc., 2003
Slide 13-14
CLOVER CORPORATION
Comparative Balance Sheets
December 31,
Dollar Percent
2002
2001 Change Change*
Assets
Current assets:
Cash and equivalents
$ 12,000 $ 23,500 $ (11,500)
(48.9)
Accounts receivable, net
60,000 40,000
obligations