Chapter 11: Problem 21
Under what circumstances might the percentage composition ratios not sum to 100 percent?
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These are the key concepts you need to understand to accurately answer the question.
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Chapter 11: Problem 21
Under what circumstances might the percentage composition ratios not sum to 100 percent?
These are the key concepts you need to understand to accurately answer the question.
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Obtain financial statements from two companies in the same industry. From the Internet or a local business library, obtain appropriate operating statistics and ratios for this industry. Conduct a comprehensive financial statement analysis of each company. Compare each company to the industry averages and to each other. Write a short report describing the positive and negative aspects of each firm with respect to its past performance, relative to each other and its industry.
Why would a lender not be too concerned about market-to-book value and price- to-earnings (P/E) ratios? Why would a creditor or banker be more concerned?
Describe how managers may make biased estimates that will cause net income to be overstated or understated. What can the analyst do to combat these earnings manipulation possibilities?
Discuss why the "What's missing?" question is so crucial during all phases of financial statement analysis.
Identify several bases of comparability that might be established before at tempting to compare ratio results.
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