...Q1-3 Comparative financial statement analysis (Horizontal analysis) Eastman Corporation Income Statement ($ millions) For Years Ended December 31 | Year 6 | | Year 5 | | Year 4 | | Cumulative Amount | | Average Annual Amount | | | | | | | | | | | Net sales | 6,880 | | 3,490 | | 2,860 | | 13,230 | | 4,410 | COGS | 3,210 | | 2,810 | | 1,810 | | 7,830 | | 2,610 | Gross profit | 3,670 | | 680 | | 1,050 | | 5,400 | | 1,800 | Operating expenses | 930 | | 465 | | 945 | | 2,340 | | 780 | Income before taxes | 2,740 | | 215 | | 105 | | 3,060 | | 1,020 | Net income | 1,485 | | 145 | | 58 | | 1,688 | | 563 | | Year 5 - 6 | | Year 4 - 5 | | Change | | % Change | | Change | | % Change | | | | | | | | | Net sales | 3,390 | | 97.13% | | 630 | | 22.03% | COGS | 400 | | 11.46% | | 1,000 | | 34.97% | Gross profit | 2,990 | | 85.67% | | -370 | | -12.94% | Operating expenses | 465 | | 13.32% | | -480 | | -16.78% | Income before taxes | 2,525 | | 72.35% | | 110 | | 3.85% | Net income | 1,340 | | 38.40% | | 87 | | 3.04% | Based on this year-to-year comparison over years 4 to 6 (trend analysis) of Eastman's performance, we found that: 1. Net sales a. Both amount and rate kept increasing b. Both amount and increasing rate of year 6 were much larger than those of year 5 c. Net sales substantially increased (97%) in year 6 in comparison to year 5 (22%) ...
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...1. EXECUTIVE SUMMARY Financial analysis is the starting point for making plans, before using any sophisticated forecasting and planning procedures. Understanding the past is a prerequisite for anticipating the future. Financial analysis is the process of identifying the financial strength and weakness of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss account. Financial analysis can be undertaken by management of the firm, or by parties outside the firm, viz. owners, creditors, investors and others. The nature of analysis will differ depending on the purpose of the analyst. 1. Investors: Who invested their money in the firm’s shares, are most concerned about the firm’s earnings. They more confidence in those firm’s that show steady growth in earnings. As such, they concentrate on the analysis of the firm’s present and future profitability. They are also interested in the firm’s financial structure to that extent influence the firm’s earning ability and risk. 2. Trade creditors and financial institution: they are interested in firm’s ability to meet their claims over a very short period of time. Their analysis will, therefore, confine to the evolution of the firms liquidity position. And the financial institutions are interested in the financial statements of the borrowing concern to ascertain its short- term as well as long-term solvency and also it profitability. 3. Suppliers: On the other hand, are concerned...
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...review the financial statements, annual report, and budget issue documents; The Patton-Fuller Community Hospital is no different. In this analysis we will look over and address all of the areas that affect staffing at Patton-Fuller. These areas will vary between the numbers of nurses to the number of patients as well as staff compensation from wages to raises. A comparison of two years’ worth of data while also using Trend Analysis will explain future budgeting aspects and the pros and cons to these decisions. Comparative data is an important tool for managers to use when analyzing data with consistency, verification, and unit measures to fully meet the requirements of understanding the reporting financial results (Baker, PhD, CPA & Baker, JD, 2011, "Chapter 14/Using Comparative Data"). Using Patton-Fuller’s 2008-2009 financial statements to provide a comparative analysis for their expenses that occurred within a 2 year period. Patton-Fuller’s balance sheet provides comparative analysis that total current assets of 130,026 in 2008, and other assets in 2009 of 128,867 decreased to a negative difference of (1159.00). Liabilities reported a gain in 2009 of 462,153 from 2008 213,450 a growth percentage of 46.19 gain. However, factoring the equity of 335,035 in 2008 to 125,564 in 2009 a percentage of 62.52 gain, the total liabilities and equity is the same percentage as current and other assets balancing the financial sheet. Patton-Fuller’s revenue and expense financial statement...
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...FINANCIAL MANAGEMENT Financial Statement Analysis The process of determining financial strengths and weaknesses of a firm by establishing strategic relationship between the items of the balance sheet, profit and loss account and other operative data. Financial Statement Analysis Metcalf and Titard:It is a process of evaluating the relationship between component parts of a financial statement to obtain a better under standing of a firm’s position and performance. Financial Statement Analysis Purpose:To diagnose the information contained in financial statements so as to judge the profitability and financial soundness of the firm. Types of Financial Analysis On the basis of: The materials used. The modus operandi of analysis – i.e., the method of operation followed in the analysis. Types of Financial Analysis On the basis of materials used: External analysis. Internal analysis. Types of Financial Analysis On the basis of materials used: External analysis. • This analysis is done by outsiders who do not have access to the detailed internal accounting records of the business firm. (Investors, creditors, government agencies, credit agencies and general public.) Types of Financial Analysis On the basis of materials used: Internal analysis. • This analysis is conducted by persons who have access to the internal accounting records of a business firm. (Executives and employees of the organization and government agencies which have statutory powers...
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...Financial Statements Analysis - An Introduction MODULE - 6A Analysis of Financial Statements 27 FINANCIAL STATEMENTS ANALYSIS - AN INTRODUCTION You have already learnt about the preparation of financial statements i.e. Balance Sheet and Trading and Profit and Loss Account in the module titled ‘Financial Statements of Profit and Not for Profit Organisations’. After preparation of the financial statements, one may be interested in analysing the financial statements with the help of different tools such as comparative statement, common size statement, ratio analysis, trend analysis, fund flow analysis, cash flow analysis, etc. In this process a meaningful relationship is established between two or more accounting figures for comparision. In this lesson you will learn about analysing the financial statements by using comparative statement, common size statement and trend analysis. Notes OBJECTIVES After studying this lesson, you will be able to : explain the meaning, need and purpose of financial statement analysis; identify the parties interested in analysis of financial statements; explain the various techniques and tools of analysis of financial statements. 27.1 FINANCIAL STATEMENTS ANALYSIS (MEANING, PURPOSE AND PARTIES INTERESTED) We know business is mainly concerned with the financial activities. In order to ascertain the financial status of the business every enterprise prepares certain statements, known as financial statements. Financial statements are mainly prepared...
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...A comparative studies of consolidated financials Table of Contents: 1. A. Description of Expanded accounting equation for Hal Burton Web consulting for the period of 1-30, 2015 B. Basic and consolidated financial statements of Hal Burton Web consulting for the period of 1-30, 2015 1. Income Statement. 2. Statement of financial position 3. Statement of owner’s equity 4. Statement of Cash Flows. 2. A. Requirements of International Accounting Standards (IAS-1) and its comparison with US-GAAP for the presentation of financial statements. B. Supporting examples of financial statements prepared under IFRS and US GAAP References. 1) A. Analyze and summarize the below transactions using the accounting equation in the form of a table showing different assets, liabilities, capital, revenue and expenses. Table 1. Expanded Accounting Information | | | |Hal Burton Web | | | | |Consulting | | | Statement of Owners Equity | | | | ...
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...JWCL165_c14_674-725.qxd 8/16/09 7:46 AM Page 674 14 Financial Statement Analysis Chapter STUDY OBJECTIVES After studying this chapter, you should be able to: 1 Discuss the need for comparative analysis. 2 Identify the tools of financial statement analysis. 3 Explain and apply horizontal analysis. 4 Describe and apply vertical analysis. 5 Identify and compute ratios used in analyzing a firm’s liquidity, profitability, and solvency. 6 Understand the concept of earning power, and how irregular items are presented. 7 Understand the concept of quality of earnings. The Navigator ✓ The Navigator Scan Study Objectives ■ Read Feature Story ■ Read Preview ■ Read text and answer p. 681 ■ p. 694 ■ Work Comprehensive Do it! p. 699 Do it! ■ p. 701 p. 703 ■ ■ Review Summary of Study Objectives ■ Answer Self-Study Questions ■ Complete Assignments ■ ✓ Feature Story IT PAYS TO BE PATIENT In 2008 Forbes magazine listed Warren Buffett as the richest person in the world. His estimated wealth was $62 billion, give or take a few million. How much is $62 billion? If you invested $62 billion in an investment earning just 4%, you could spend $6.8 million per day—every day—forever. How did Mr. Buffett amass this wealth? Through careful investing. You think you might want to follow Buffett’s example and transform your humble nest-egg into a mountain of cash. His techniques have been...
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...Prepare the cash flows from operating activities section of the statement of cash flows. Q -3 Martinez Corporation engaged in the following cash transactions during 2014. Q-4 The major classifications of activities reported in the statement of cash flows are operating, investing, and financing. Classify each of the transactions listed below as: Q-5 E5-14 http://edugen.wiley.com/edugen/art2/common/pixel.gif The comparative balance sheets of Constantine Cavamanlis Inc. at the beginning and the end of the year 2014 are as follows. Exercise 5-16 (Part Level Submission) A comparative balance sheet for Shabbona Corporation is presented below. Exercise 5-18 (Part Level Submission) The comparative balance sheets of Madrasah Corporation at the beginning and end of the year 2014 appear below. IFRS Practice Question 3 Companies that use IFRS: Entry field with correct answer A company has purchased a tract of land and expects to build a production plant on the land in approximately 5 years. During the 5 years before construction, the land will be idle. Under IFRS, the land should be reported as: -------------------------------------------------------------------------------------- ACC 421 Chapter 23 wileyplus FOR MORE CLASSES VISIT www.acc421mart.com Exercise 23-11 Condensed financial data of Pat Metheny Company for 2014 and 2013 are presented below Problem 23-6 Comparative balance sheet accounts of Marcus Inc. are presented below...
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...302 Professor Ashley Harper November 7, 2014 DIFFERENCES BETWEEN GAAP AND IFRS 2 Both the IFRS ( International Financial Reporting Standards ) and the GAAP ( Generally Accepted Accounting Principles ) are a set of accounting rules that companies either can or must follow when preparing their financial statements. Set by policy boards, the United States enforces the use of GAAP as the set of rules of processes and standards that its companies must use for reporting and recording of their financial statements. At the same, other parts of the words use the IFRS as their set of rules for companies to follow. This IFRS set of rules were developed by the International Accounting Standards Board (IASB). Due to this, the world has been talking about combining the two standards into one globalized set of accounting standards that will comprise of both standards. The object of this would be to have the world recognize one set of globalized set of accounting practices. There are some differences that the US should be aware of before the convergence between the two ever takes place. Some of the major differences between GAAP and IFRS revolve around grants to employees, vesting, modifications, tax withholding, inventory differences, revenues and expenses, required financial documents, assets and liabilities, gains and losses, and comprehensive income. One of the key differences between the two sets of standards is when...
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...EFFECTIVE FINANCIAL REPORTING Corporate financial statements and their related disclosures are fundamental to sound investment decision making. The well-being of global financial markets, and of the investors who entrust their financial present and future to those markets, depends directly on the information financial statements and disclosures provide. The following framework is intended to enhance effectiveness in financial reporting. Guiding Principles • The primary financial statements must provide the information needed by equity investors, creditors, and other suppliers of risk capital. • In financial reporting, standard-setting as well as statement preparation, the entity must be viewed from the perspective of an investor in the common equity issued by the company. • Fair value information is the most relevant information for financial decision making. • Recognition and disclosure must be determined by the relevance of the information to investment decision making and not based upon measurement reliability alone. • All transactions and events must be recognized as they occur in the financial statements. • Investors’ information requirements must determine the materiality threshold. • Financial reporting must be neutral. • All changes in net assets, including changes in fair values, must be recorded in a single financial statement, the Statement of Changes in Net Assets Available to Common Shareowners. • The cash flow statement provides ...
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...contractor (also “Saipem” hereafter). The firm is a subsidiary of ENI S.p.A., the largest Italian energy company, which currently holds a 42.93% share in Saipem. The listed competitor of the firm assigned to me that I choose is Schlumberger Limited (also “Schlumberger” hereafter). In the World’s Top 10 biggest oilfield services companies list, Schlumberger is the top 1 biggest company and Saipem is the top 3 biggest company; furthermore both companies are listed. For these reasons, we can consider those companies as proper peers. We collected the 2014 Annual Report for both companies. The Annual Reports, retrieved from the Investors section in the related official websites, show the consolidated figures as of December 31, 2014 and the comparative data for the year 2013. Saipem is one of the largest turnkey contractors in the oil and gas industry. Founded in 1957 as service provider to ENI, the company has made its name handling the oilfield services for a number of challenging projects both on and offshore. With over 30,000 employees, the company operates in all the major oil and gas producing nations, the company has earned a reputation in the industry for achieving results. Saipem own and operate over 50 vessels that deal with all aspects of offshore construction and services activities including drilling and pipe laying. The company has a number of high profile contracts in the Middle East and works with most major NOCs including Saudi Aramco, ADNOC and Sonatrach. Saipem has...
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...Comparative Summary Alonzo miller HCS/577 July 6, 2015 Sharon Sanders Comparative Summary The United States health care system have many organizations that are called entity which have an effect on people daily living and survivor in life. I will discuss in this paper the entity that I chose from the list of each health care financial environment and described in the Financial Environments Worksheet. I will address and compare the environment that I selected in week one assignment. I will describe the organizations financial structure. I will explain which unique policy to the financial environment that I selected from week one assignment. I will discuss financial management practices that are prevalent in the financial environment. I will in this paper discuss what are the effective financial management that is more difficult in health care than in other industries. Describe the financial structure. The mission of the Department of Veterans Affairs is a government entity that serves veterans of the United States and their dependents, and beneficiaries with compassion and dignity and veterans principal advocate to ensure they receive social support, benefits, medical care, benefits, and lasting memorials. (va.gov, 2016). Department of veterans' affairs financial structure consists of consolidated financial structure consolidated balance sheets that are base dollars in the millions. The assets are kept on this sheet with treasury fund balance. The financial...
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...Presentation On Analysis of Financial Statements. Prepared By: Md. Nazmul Hasan. Analysis of Financial Statements What is Financial Statement Analysis: Financial Statements Analysis is an Analysis of the Following Statements: Income Statement Balance Sheet Statement of Owners Equity and Statement of Cash Flow Purpose of Analysis Financial statement analysis helps users make better decisions. Internal Users Managers Officers External Users Shareholders Lenders Customers Financial Statements Are Designed for Analysis Classified Financial Statements Items with certain characteristics are grouped together. Comparative Financial Statements Amounts from several years appear side by side. Consolidated Financial Statements Information for the parent and subsidiary are presented. Results in standardized, meaningful subtotals. Helps identify significant changes and trends. Presented as if the two companies are a single business unit. Tools of Analysis: Dollar & Percentage Changes Component Percentages Trend Percentages Ratios Dollar and Percentage Changes or Horizontal Analysis Dollar Change: Dollar Change = Analysis Period Amount – Base Period Amount Percentage Change: % Percent Change = Dollar Change ÷ Base Period Amount Dollar and Percentage Changes or Horizontal Analysis ABC, Inc. Comparative Balance Sheets December 31, 2005 Assets Current assets: Cash and equivalents Accounts receivable...
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...INTRODUCTION ABOUT CO-PERATIVE BANK Farmers in India are scattered all over the country and need short term borrowings for agricultural purpose. This need is not fulfilled by commercial bank, which unsuited for financing agricultural. Land which these farmers can offer to cover bank advances is not generally accepted as security by commercial bank therefore special type of banks are necessary for the financing of agricultural co-operative banks is to offer banking facilities to persons of limited means requiring credit for productive use in the use of the land & Labours at their disposal. In 1914 the government of India appointed committee under sir " EDWARD MAELAGAN " to survey the progress of co-operation in the country. The committed its report in 1915 in which it made several recommendations the principle one being the institution of provisional co-operative banks to save as apex bank in the hierarchy in India is based upon the findings of this report. In 1919 the Montague Chelmsford Act made co-operation a provincial subject. Since then all the state government passed their own separate co-operative societies act. The co-operative banking structure in India may be divided in three parts. - A) Primary Co-operative Credit Societies. B) Central Co-operative Bank. C) State Co-operative Bank. A) Primary Co-operative Credit Societies:- The primary co-operative credit society is an association of borrowers and non-borrowers residing in a particular...
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...Introduction- What is a financial statement analysis: Financial statement analysis is defined as the process of identifying financial strengths and weaknesses of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss account. There are various methods or techniques that are used in analyzing financial statements, such as comparative statements, schedule of changes in working capital, common size percentages, funds analysis, trend analysis, and ratios analysis. Financial statements are prepared to meet external reporting obligations and also for decision making purposes. They play a dominant role in setting the framework of managerial decisions. But the information provided in the financial statements is not an end in itself as no meaningful conclusions can be drawn from these statements alone. However, the information provided in the financial statements is of immense use in making decisions through analysis and interpretation of financial statements. Objectives- What manager need to analysis Financial statement: 1. Prepare and interpret financial statements in comparative and common-size form. 2. Compute and interpret financial ratios that would be most useful to a common stock holder. 3. Compute and interpret financial ratios that would be most useful to a short-term creditor 4. Compute and interpret financial ratios that would be most useful to long -term creditors. 1.Assessment Of Past Performance Past...
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