Created
November 10, 2022 23:23
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Q-20
The balance sheet and income statement shown below are for Pettijohn Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over.| Balance Sheet (Millions of $) | |
|---|---|
| Assets | 2016 |
| Cash and securities | $ 1,554.0 |
| Accounts receivable | 9,660.0 |
| Inventories | 13,440.0 |
| Total current assets | $24,654.0 |
| Net plant and equipment | 17,346.0 |
| Total assets | $42,000.0 |
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Q-1
A company reports accounting data in its financial statements. This data is used for financial analyses that provide insights into a company’s strengths, weaknesses, performance in specific areas, and trends in performance. These analyses are often used to compare a company’s performance to that of its competitors, or to its past or expected future performance. Such insight helps managers and analysts improve their decision making.
Consider the following scenario:
You work for a brokerage firm. Your boss asked you to analyze Blue Parrot Manufacturing’s performance for the past three years and to write a report that includes a benchmarking of the company’s performance.
Which of the following components would be best for you to include in your financial statement analysis?
Correct A calculation of financial ratios and an evaluation of the comparative trends in the firm’s financial position and performance over a certain time period