Jiambalvo Chapter 14

Powerful Essays
Exactostock/SuperStock

534

Analyzing Financial Statements: A Managerial Perspective
Home and G arden Warehouse (HGW) is a large home i m p r o v e m e n t r e t a i l e r, m u c h l i k e H o m e D e p o t o r L o w e ’s .
A number of managers are interested in its financial situation. For example, Barbara Wilson, president of HGW, wants to know whether the company has been able to obtain planned discounts from suppliers and reduce selling and operating expenses. Bob Watson, a manager at John Deere, which is one of HGW’s suppliers, is also interested in HGW’s financial situation. Deere is considering linking its information system to the electronic checkout systems at the more than 200 HGW locations so it can track sales and efficiently schedule production of products it markets exclusively to HGW. Before making this investment, Bob wants to be confident that HGW is profitable and financially stable. Unless HGW is going to be around for the foreseeable future, Deere’s investment won’t be worthwhile. Finally, Thomas Nandier, the CEO of HGW, is preparing for a meeting with shareholders and financial analysts, and he wants to be ready for questions they may ask about the company’s performance. Thus, he too is interested in HGW’s financial situation. In each of these situations, the managers will analyze the financial statements of HGW to address their concerns. This chapter discusses how to perform this analysis.

1. Explain why managers analyze financial statements. 2. Perform horizontal and vertical analyses of the balance sheet and the income statement. 3. Discuss earnings management and the importance of comparing net income to cash flow from operations. 4. Understand how MD&A, credit reports, and news articles can be used to gain insight into a company’s current and future financial performance. 5. Calculate and interpret profitability ratios. 6. Calculate and interpret turnover ratios. 7. Calculate and interpret debt-related ratios.

iStockphoto

iStockphoto

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Jiambalvo

    • 576 Words
    • 3 Pages

    encouraged and expected. Also , as attendance is a University requirement, an electronic attendance sheet will be used; therefore, students will be automatically dropped from the course after 3 absents. MATERIAL TO BE COVERED |CHAPTER 10: PLANT ASSETS, NATURAL RESOURCES & INTANGIBLE ASSETS…

    • 576 Words
    • 3 Pages
    Satisfactory Essays
  • Powerful Essays

    chapter 14

    • 1258 Words
    • 6 Pages

    CHAPTER 14 – Test Bank Multiple-Choice Questions 1. The Tempietto was a a. martyrium. b. little temple. c. baptistery. d. mausoleum. Answer: a 2. Which is NOT a feature of the Tempietto? a. a Doric peristyle b. a balustrade c. a dome d. an Ionic frieze e. a cella Answer: d 3. The painting of An Ideal City (artist anonymous) featured in the chapter illustrates what key aspect of Renaissance urban architecture? a. fixed spatial relationships between topiary and structures…

    • 1258 Words
    • 6 Pages
    Powerful Essays
  • Good Essays

    Chapter 14

    • 1568 Words
    • 8 Pages

    Chapter 14: Signal Transduction Mechanisms: Messengers and Receptors Signal Transduction Mechanisms: II. Messengers and Receptors In the second major means of intercellular communication the signal is transmitted by regulatory chemical messengers Receptors are located on receiving cells that can be quite distant from the secreting cell Chemical Signals and Cellular Receptors Cells produce signals, in some cases by displaying molecules on their surfaces or by releasing a chemical signal Multicellular…

    • 1568 Words
    • 8 Pages
    Good Essays
  • Satisfactory Essays

    Chapter 14

    • 1302 Words
    • 19 Pages

    Chapter 14 Working Capital and Current Assets Management „ Solutions to Problems P14-1. LG 2: Cash Conversion Cycle Basic = Average age of inventories + Average collection period = 90 days + 60 days = 150 days (a) Operating cycle (OC) (b) Cash Conversion Cycle (CCC) = Operating cycle − Average payment period = 150 days − 30 days = 120 days = (total annual outlays ÷ 365 days) × CCC = [$30,000,000 ÷ 365] × 120 = $9,863,013.70 (d) Shortening either the average age of inventory or the average collection…

    • 1302 Words
    • 19 Pages
    Satisfactory Essays
  • Better Essays

    Chapter 14

    • 1153 Words
    • 5 Pages

    CHAPTER 14 Transportation in Supply Chain Transportation refers to the movement of product from one location to another as it makes it way form the beginning of a supply chain driver because products are rarely produced and consumed in the same location. Transportation is a significant component of the costs incurred by most supply chains. The role of transportation is even more significant in global supply chains. Modes of transportation • Air transportation. : Although this mode…

    • 1153 Words
    • 5 Pages
    Better Essays
  • Powerful Essays

    Chapter 14

    • 668 Words
    • 5 Pages

    Chapter 14 Multiple Choice—CPA Adapted 1. On July 1, 2012, Spear Co. issued 3,000 of its 10%, $1,000 bonds at 99 plus accrued interest. The bonds are dated April 1, 2012 and mature on April 1, 2022. Interest is payable semiannually on April 1 and October 1. What amount did Spear receive from the bond issuance? a. $3,045,000 b. $3,000,000 c. $2,970,000 d. $2,895,000 2. On January 1, 2012, Solis Co. issued its 10% bonds in the face amount of $4,000,000, which mature on January 1, 2022. The…

    • 668 Words
    • 5 Pages
    Powerful Essays
  • Good Essays

    Chapter 14

    • 1558 Words
    • 9 Pages

    CHAPTER 14 DIVIDENDS AND DIVIDEND POLICY Solutions to Questions and Problems Basic NOTE: All end-of-chapter problems were solved using a spreadsheet. Many problems require multiple steps. Due to space and readability constraints, when these intermediate steps are included in this solutions manual, rounding may appear to have occurred. However, the final answer for each problem is found without rounding during any step in the problem. 1. With no taxes we would expect the stock price to drop by exactly…

    • 1558 Words
    • 9 Pages
    Good Essays
  • Satisfactory Essays

    Chapter 14

    • 7513 Words
    • 35 Pages

    Chapter 14 Student: ___________________________________________________________________________ 1. Proctor and Gamble was able to get Joy into Japanese homes through all of the following except A. product formula targeted at the unmet needs of the consumers. B. significantly low price to drive the competitors out. C. compelling advertising campaigns. D. packaging that appealed to retailers. E. None of these answers is correct 2. A(n) _____________ marketing strategy that views the world's consumers…

    • 7513 Words
    • 35 Pages
    Satisfactory Essays
  • Powerful Essays

    Chapter 14

    • 3757 Words
    • 38 Pages

    Psychology 101: Introduction to Psychology Chapter 14: Practice Questions 1. ______ is the process by which we come to form an understanding of our social environment. A) Social psychology B) Social perception C) Self-fulfilling prophecy D) Stereotyping E) Impression formation 2. Regarding impression formation, which of the following statements is FALSE? A) People tend to form first impressions quickly. B) Our impressions of others are influenced by the amount of information they choose…

    • 3757 Words
    • 38 Pages
    Powerful Essays
  • Satisfactory Essays

    chapter 14

    • 296 Words
    • 3 Pages

    Question 1 2 / 2 points True or False? A model is an abstraction of a real system. True + False Question 2 2 / 2 points True or False? In a discrete-event simulation, an event is an interaction between objects in the system. True + False Question 3 2 / 2 points True or False? Meteorologists often use multiple simulated models, which make different assumptions, to predict the weather. True+ False Question 4 2 / 2 points True or False? The most common application…

    • 296 Words
    • 3 Pages
    Satisfactory Essays