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ACC 561 Jason Corporation Ratio Analysis

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Ratio Analysis
Dawn Creech
ACC/561
April 3, 2017
Jason See

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Ratio Analysis
Financial statements provide a detailed outline of a company’s financial health. The P.
Jason corporation wants to expand its operations and has applied for a loan. Analyzing the
information provided by the president of the corporation, it is determined that additional data
must be submitted for a decision to be made. The loan process can be tedious, meticulous, and
time consuming. In protecting the best interest of the lender, it is vital to determine the
company’s ability to meet its financial obligations.
Importance of audited financial statements
There are numerous reasons to have audited financial statements; (1) it can prevent
deliberate misstatement when covering fraud, hiding poor decisions, or trying to make the
company’s financial health look better than it really is, (2) it can make sure that judgment
decisions are not biased and in the best interest of the company, (3) it can ensure the accuracy,
dependability, and consistency of the data received, (4) can ensure that GAAP standards are
being followed, (5) full disclosure is being reported, (6) creditors and suppliers may want it
before granting credit and some loan contracts may require an annual audit be submitted, and (7)
some states require companies to have annual audits, the IRS may request it to verify income,
assets, and liabilities, and the SEC requires all companies traded on the New York Stock
Exchange provide annual audited financial statements (Mahoney, 1995).
Implications of ratios, favorable/unfavorable, and relevancy
Ratio
2017
2016
Current Ratio
3.1
2.1
Asset Turnover
2.8
2.2
Net Income
Up 32%
Down 8%
Earnings per Share
$3.30
$2.50

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1 Ratio Analysis Dawn Creech ACC/561 April 3, 2017 Jason See 2 Ratio Analysis Financial statements provide a detailed outline of a company’s financial health. The P. Jason corporation wants to expand its operations and has applied for a loan. Analyzing the information provided by the president of the corporation, it is determined that additional data must be submitted for a decision to be made. The loan process can be tedious, meticulous, and time consuming. In protecting the best interest of the lender, it is vital to determine the company’s ability to meet its financial obligations. Importance of audited financial statements There are numerous reasons to have audited financial statements; (1) it can prevent deliberate misstatement when covering fraud, hiding poor decisions, or trying to make the company’s financial health look better than it really is, (2) it can make sure that judgment decisions are not biased and in the best interest of the company, (3) it can ensure the accuracy, dependability, and consistency of the data received, (4) can ensure that GAAP standards are being followed, (5) full disclosure is being reported, (6) creditors and suppliers may want it before granting credit and some loan contracts may require an annual audit be submitted, and (7) some states require companies to have annual audits, the IRS may request it to verify income, assets, and liabilities, and the SEC requires all companies traded on the New York Stock Exchange provide annual ...
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