Educational Changes in the Schools

Why is that analysis the best fit in this case

In the case where the financial statements of one company are prepared for two consecutive years , the best fit for this case would be to use the horizontal analysis . Using trend analysis would be a waste of extra time because what is required is to determine the performance between two accounting periods

Describe a situation in which you would use either vertical or ratio analysis . Why is that analysis the best fit in this case

Vertical analysis is used to determine the

relationship between accounts in one financial statement . For example , the company manager will divide the net profit of the current year 1 ,000 by the current year revenue of 10 ,000 to learn that net profit is only ten percent of the current year revenues . The manager can then divide last year 's net income of 1 ,000 by last years revenues of 12 ,000 to get a net profit ratio of 8 .33 percent . The manager can then find that the current years ' net profit ratio is better than the net profit ratio of the prior year . This means that the company did better during the current year as compared to the prior years

Ratio analysis is the use of division formula to determine the percentage relationship between two variables . For example , dividing relationship is The ideal ratio of debt to equity is fifty percent debt and fifty percent equity . This is what is called in accounting a leverage analysis . The best fit for this scenario is to use ratio analysis because this the ratio that is used by many persons2 .Suggest several reasons that a 2 :1 current ratio may not be adequate for a particular company For some companies , a current ration of 2 :1...