horizontal analysis what is vertical analysis? – for multiple companies compare line items on a financial statement to each other, as a % when a stockholder gets preferred stock, the stockholder gets paid dividends first, but no voting rights

horizontal analysis

what is vertical analysis?

– for multiple companies 
compare line items on a financial statement to each other, as a %

when a stockholder gets preferred stock, the stockholder gets

paid dividends first, but no voting rights

how do you calculate vertical analysis

income statement: divide by total sales
balance sheet: divide by total assets

which ratio is most useful in evaluating solvency?

debt to equity ratio

what are the only ratios that shows solvency (ability to pay long term liabilities)?

debt to equity ratio & times earned interest ratio

liquidity

– ability to pay current liabilities 
– short term focus

solvency

– long term focus 
– long term liabilities

On September 1, 2015, Gold Magazine sold 400 one-year subscriptions for $90 each. The total amount received was credited to unearned revenue. What should be the required adjusting entry on December 31, 2015?

Debit: Unearned Revenue 12,000
Credit: Service Revenue 12,000

you are adjusting the entry, so you debit what you credited (unearned revenue)

how do you calculate gross profit?

revenues – COGS – returns – allowances – discounts

FOB destination

when A sells to B, A maintains title until goods arrive at B’s door

what goes on an income statement?

Revenues, Expenses, Net Income
(gains and losses)

what goes on the Statement of Stockholders Equity Common Stock, Retained Earnings, Total Stockholder’s Equity

Beginning Balance
Issuance of Common Stock
Net Income

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