Why are ratios and trends used in financial analysis

1. Why are ratios and trends used in financial analysis?


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You are provided with the following information for Kiley Enterprises, effective as of its April 30, 2010, year-end

P2-3A You are provided with the following information for Kiley Enterprises, effective as of its April 30, 2010, year-end.

Accounts payable $834
Accounts receivable 810
Building, net of accumulated depreciation 1,537
Cash 1,270
Common stock 900
Cost of goods sold 990
Current portion of long-term debt 450
Depreciation expense 335
Dividends paid during the year 325
Equipment, net of accumulated depreciation 1,220
Income tax expense 165
Income taxes payable 135
Interest expense 400
Inventories 967
Land 2,100
Long-term debt 3,500
Prepaid expenses 12
Retained earnings, beginning 1,600
Revenues 4,600
Selling expenses 210
Short-term investments 1,200
Wages expense 700
Wages payable 222

(a) Complete income statement and a retained earnings statement for Kiley Enterprises for the year ended April 30, 2010.
(b) Complete the classified balance sheet for Kiley Enterprises as of April 30, 2010.


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You are the controller of Software Company, a distributor of computer software, which is planning to acquire a portion of the net assets

You are the controller of Software Company, a distributor of computer software, which is planning to acquire a portion of the net assets of a product line of Midge Company, a competitor enterprises. The projected acquisition cost is expected to exceed substantially the current fair value of the identifiable net assets to be acquired, which the competitor has agreed to sell because of its substantial net losses of recent years. The board of directors of Software asks if the excess acquisition costs may appropriately be recognized as goodwill.

Prepare a memorandum to the board of directors in answer to the question


Click here for the solution: You are the controller of Software Company, a distributor of computer software, which is planning to acquire a portion of the net assets

Differentiate between the operating and financial budgets that are contained in a master budget

8-5 Differentiate between the operating and financial budgets that are contained in a master budget. Why are both types needed?


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