Financial Statement Project 1.Comparative financial statements show financial information for several years side by side in the form of absolute values, percentages, or both. Common-size financial statements present all financial information in percentage terms balance sheet information is shown as percentages of assets & income statement information is shown as percentages of sales. 2.A company's capital structure measured by debt & equity ratio's is important to financial statement analysis in many ways. Capital structure is important for companies to know how much debt they have compared to the amount of equity they have, so they know if they need to decrease debt or increase equity or both to keep the company financially stable. Capital structure is also used for acquiring loans by showing the bank you have more income than debt and will be able to pay back the loan, this information can also be used when evaluating your competition and the market to see what steps you need to take to grow your business & not fall behind your competition or end up being bought out by your competition. 3.The Current Ratio shows a company's ability to pay its current liabilities with its current assets. This shows the financial health of the company and can measure its ability to pay off its debts within a year. Current Ratio= Current Assets Current Liabilities Quick ratio subtracts inventories from current assets then divide into liabilities. This shows that current liabilities are covered by cash & by items with a ready cash value. This shows the financial health of the company by showing how much income they have compared to the amount of liabilities they have and if they are in good financial standing. Quick Ratio= Cash+Short−terminvestments+current receivables Current Liabilities The accounts receivable turnover ratio shows a company's effectiveness in collecting its accounts receivables. This measures how well a company uses and manages the credit it extends customers & how quickly the det is collected or paid. This shows the company's financial health by showing they can bring in money from customers who do not pay up front which is more assets than liabilities. Accounts Receivableturnover= Net Sales Average accountsreceivable,net Debt ratio is the portion of a company's assets that are financed by debt. If the ratio is greater than 1 a considerable portion of assets are funded by debt, if it is less then 1 a small portion of assets are funded by debt. The company is in good financial health if the ratio is less than 1 meaning the company has a good amount of assets that are not funded by debt. Debt Ratio= Total Liabilities Totalassets Equity ratio measures the amount of assets that are financed by the owner's investments by comparing total equity in the company to total assets. The higher the ratio the better the financial health of the company due to higher investment levels if the ratio is lower than 0.50 then the company has bad financial health because there is less investment in the company. Equity Ratio= Total Equity Total assets Debt-to-equity ratio is all short-term and long-term debt divided by shareholders equity. A higher debt ratio to equity means there is more debt to $1 of assets which means the company has bad financial health. If the ratio debt is less than $1 of assets the company has good financial health. Debt−¿−Equity−Ratio= Total Liabilities Total Equity 4.3 Facts: Apple 1.Steve Jobs the founder of Apple was fired in 1985 at the age of 30. 2.There was a third co-founder of Apple, Ronald Wayne who designed the first Apple logo. 3.Steve Jobs and Steve Wozniak created a game breakout for Atari that they hid on their iPod people had to move around the menu then hold the home button for three seconds.
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