Haroun Company Solution

Apr 28th, 2015
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Liberty University
Course: ACCT
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Haroun Company Solution Sales 182.5% 161.2% 147.6% 136.2% 127.8% 119.6% 100.0% Cost of goods sold 212.6 176.1 153.9 136.9 128.3 121.2 100.0 Gross profit 131.0 135.7 136.8 135.1 126.9 117.0 100.0

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Chapter 13Analyzing Financial StatementsQUESTIONS1.Financial reporting includes the entire process of preparing and issuing financial information about a company. Financial statements are an important part of financial reporting but they are less than the whole.2.With comparative statements, financial statement items for two or more successive accounting periods are placed side by side on a single statement, with the change in each item expressed as both a dollar amount and a percent. Common-size comparative statements express each financial statement item as a percent of some base amount that is assigned a value of 100%.3.Total assets (or equivalently, the total of liabilities plus equity) are assigned a value of 100% on a common-size balance sheet. Net sales (revenues) are assigned a value of 100% on a common-size income statement.4.The nature of a company's business, the composition of its current assets, and the turnover of its current assets are three important factors that should be considered in deciding whether a current ratio is good or bad.5.A 2-to-1 current ratio may not be adequate if the company's current assets consist of a large proportion of slow-turning accounts, notes, and merchandise inventory. The general nature of the business also may make the 2-to-1 rule of thumb inadequate.6.Adequate working capital enables a company to carry sufficient inventories, meet current debts, take advantage of cash discounts, and extend favorable terms

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