Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

Bob Lawson is the president of his company; his CFO is Mark Ziegler. Like many entrepreneurs, Bob is more concerned about the big picture and leaves the day-to-day accounting details up to Mark. Bob reviews the financial statements regularly; however, Mark would like to help him understand how to make better use of the company's financial statements to gauge the changes in his business and plan for the future. Even though Mark generates all statements in terms of dollars and percents (common-size statements), Bob ignores the common-size statements. The two have agreed to meet next week.

Mark plans to begin his coaching with the following topics:

Making comparisons using standardized financial statements Calculating and understanding performance ratios Determining the company's profitability and growth Drawbacks associated with financial statement comparisons
Bob is pleased that the company's sales have increased to $2,650,000 this year from $2,240,000 last year. What suggestion should Mark make to Bob to keep the sales increase in perspective?

Make sure you also pay attention to the common-size statements. This will show what, if any changes in other items on the financial statements (compared to revenue) also occurred.

Bob should know that the increase could result from a decrease in the cost of good sold.

Mark should remind Bob that this increase in sales will also affect owner's equity.

Bob needs to understand that even if sales decrease next year, depreciation of the same amount will help retained earnings.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M915430

Have any Question? 


Related Questions in Accounting Basics

Question 1with respect to transferability of ownership

Question 1 With respect to transferability of ownership interests, a sole proprietor may: not transfer her interests may only transfer her interest with approval of the state freely transfer her interests transfer her in ...

Intermediate accounting assignment1 the nail company paid

Intermediate Accounting Assignment 1) The Nail Company paid $1,200,000 to purchase 35% of the outstanding stock of the Toe Corporation. Toe Corporation reports $450,000 of net income and paid a cash dividend of $150,000. ...

Accounting assignmentbullemployee theft is a major problem

Accounting Assignment • Employee theft is a major problem in the U.S. retail industry. Information obtained from SecurityInfoWatch reported that twenty three (23) major retailers alone apprehended over 1.1 million shopli ...

You are starting your own internet business you decide to

You are starting your own Internet business. You decide to form a company that will sell cookbooks online. Justcookbooks.com is scheduled to launch 6 months from today. You estimate that the annual cost of this business ...

This assignment will assess the following learning

This assignment will assess the following learning outcomes: - Demonstrate the impact on the financial statements and the implication for different users of accounts of alternative ways of treating controversial accounti ...

Accounting questions1 if cash is 2345 in 20x2 and 3671 in

Accounting Questions 1. If Cash is $2,345 in 20X2 and $3,671 in 20X1, what is the percentage of increase or (decrease) from 20X1 to 20X2? A. 56.55%******* B. (56.55%) C. 36.12% D. (36.12%) 2. Gross profit by department a ...

Study guide1 what is the beta of a firm whose equity has an

STUDY GUIDE 1. What is the beta of a firm whose equity has an expected return of 21.30%, the risk-free rate is 7%, and the expected return on the stock market is 18%? 2. Two reasons for the agency problem in modern corpo ...

Discussionsustainable income and ratio analysis please

Discussion "Sustainable Income and Ratio Analysis" Please respond to the following: • Describe sustainable income and the importance of sustainable income in the evaluation of the income statement. Choose at least two it ...

Almas recording studio rents studio time to musicians in

Alma's Recording Studio rents studio time to musicians in 2-hour blocks. Each session includes the use of the studio facilities, a digital recording of the performance, and a professional music producer/mixer. Anticipate ...

Accounting questionfollowing the completion of the

Accounting Question: Following the completion of the investigation of a potential fraud case, you are informed by your manager that the case will be brought to trial. As part of the litigation process you will be asked t ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen