736 Chapter 15 Financial Statement Analysis instructions (a) Prepare a vertical analysis of the 2009 income statement data for Logsdon Company and Waitlin Company in columnar form. (b XXXXXXXXXX,...

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Answered Same DayDec 21, 2021

Answer To: 736 Chapter 15 Financial Statement Analysis instructions (a) Prepare a vertical analysis of the 2009...

David answered on Dec 21 2021
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Ratio Analysis
Ratio Analysis is one of the most commonly used tool of financial analysis. It is essentially an
eff
ort to develop useful relationship between individual items or group of items in the balance
sheet or income account. The objects and utility of ratio analysis is limited not only to the
internal parties but to the credit suppliers, banks and lending institutions also. Ratio Analysis
tells about the financial position of the enterprise as to whether the capital structure of the
business is in proper order, whether the capital structure of the enterprise is satisfactory, whether
the credit policy in relation to sales and purchases is sound and whether the company is
creditworthy. Thus, ratio analysis highlights the liquidity, solvency, profitability and capital
gearing position.
a) Earnings Per Share:
Earnings per share are the income earned by the shareholders per share.
Earnings per share = Net Income / Number of Outstanding shares
Earnings per Share = $192,000 / 57,000 shares
Earnings per Share = $3.37
b) Return on Common Stockholder’s Equity:
Return on Equity evaluates the amount of net income earned by using each dollar of total...
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