Solutions Manual For
Introduction to Managerial
th
Accounting 9 Edition By
Peter Brewer, Ray Garrison,
Eric Noreen
(All Chapters 1-14, 100%
Original Verified, A+ Grade)
All Chapters Arranged
Reverse: 14-1
This is The Original Solutions
Manual For 9th Edition, All
other Files in The Market are
Fake/Old/Wrong Edition.
,Chapter 14
Financial Statement Analysis
Solutions to Questions
© The McGraw-Hill Companies, Inc., 2022. All rights reserved.
Solutions Manual, Chapter 14 1
,14-1 Horizontal analysis examines 14-5 The dividend yield is the
how a particular item on a dividend per share divided by the
financial statement such as sales market price per share. The other
or cost of goods sold behaves over source of return on an investment
time. Vertical analysis involves in stock is increases in market
analysis of items on an income value.
statement or balance sheet for a
single period. In vertical analysis 14-6 Financial leverage results
of the income statement, all items from borrowing funds at an
are typically stated as a interest rate that differs from the
percentage of sales. In vertical rate of return on assets acquired
analysis of the balance sheet, all using those funds. If the rate of
items are typically stated as a return on the assets is higher than
percentage of total assets. the interest rate at which the
funds were borrowed, financial
14-2 By looking at trends, an leverage is positive and
analyst hopes to get some idea of stockholders gain. If the return on
whether a situation is improving, the assets is lower than the
remaining the same, or interest rate, financial leverage is
deteriorating. Such analyses can negative and the stockholders
provide insight into what is likely lose.
to happen in the future. Rather
than looking at trends, an analyst 14-7 If the company experiences
may compare one company to big variations in net cash flows
another or to industry averages from operations, stockholders
using common-size financial might be pleased that the
statements. company has no debt. In hard
times, interest payments might be
14-3 Price-earnings ratios reflect very difficult to meet.
investors’ expectations concerning On the other hand, if
future earnings. The higher the investments within the company
price-earnings ratio, the greater can earn a rate of return that
the growth in earnings investors exceeds the interest rate on debt,
expect. For this reason, two stockholders would get the
companies might have the same benefits of positive leverage if the
current earnings and yet have company took on debt.
quite different price-earnings
ratios. By definition, a stock with 14-8 The market value of a share
current earnings of $4 and a price- of common stock often exceeds
earnings ratio of 20 would be the book value per share. Book
selling for $80 per share. value represents the cumulative
effects on the balance sheet of
14-4 A rapidly growing tech past activities, evaluated using
company would probably have historical prices. The market value
many opportunities to make of the stock reflects investors’
investments at a rate of return expectations about the company’s
higher than stockholders could future earnings. For most
earn in other investments. It companies, market value exceeds
would be better for the company book value because investors
to invest in such opportunities anticipate future earnings growth.
than to pay out dividends and thus
one would expect the company to 14-9 A 2 to 1 current ratio might
have a low dividend payout ratio. not be adequate for several
reasons. First, the composition of
© The McGraw-Hill Companies, Inc., 2022. All rights reserved.
Solutions Manual, Chapter 14 2
, the current assets may be heavily low quality, including large
weighted toward slow-turning and amounts of accounts that may be
difficult-to-liquidate inventory, or difficult to collect.
the inventory may contain large
amounts of obsolete goods.
Second, the receivables may be
© The McGraw-Hill Companies, Inc., 2022. All rights reserved.
Solutions Manual, Chapter 14 3
Introduction to Managerial
th
Accounting 9 Edition By
Peter Brewer, Ray Garrison,
Eric Noreen
(All Chapters 1-14, 100%
Original Verified, A+ Grade)
All Chapters Arranged
Reverse: 14-1
This is The Original Solutions
Manual For 9th Edition, All
other Files in The Market are
Fake/Old/Wrong Edition.
,Chapter 14
Financial Statement Analysis
Solutions to Questions
© The McGraw-Hill Companies, Inc., 2022. All rights reserved.
Solutions Manual, Chapter 14 1
,14-1 Horizontal analysis examines 14-5 The dividend yield is the
how a particular item on a dividend per share divided by the
financial statement such as sales market price per share. The other
or cost of goods sold behaves over source of return on an investment
time. Vertical analysis involves in stock is increases in market
analysis of items on an income value.
statement or balance sheet for a
single period. In vertical analysis 14-6 Financial leverage results
of the income statement, all items from borrowing funds at an
are typically stated as a interest rate that differs from the
percentage of sales. In vertical rate of return on assets acquired
analysis of the balance sheet, all using those funds. If the rate of
items are typically stated as a return on the assets is higher than
percentage of total assets. the interest rate at which the
funds were borrowed, financial
14-2 By looking at trends, an leverage is positive and
analyst hopes to get some idea of stockholders gain. If the return on
whether a situation is improving, the assets is lower than the
remaining the same, or interest rate, financial leverage is
deteriorating. Such analyses can negative and the stockholders
provide insight into what is likely lose.
to happen in the future. Rather
than looking at trends, an analyst 14-7 If the company experiences
may compare one company to big variations in net cash flows
another or to industry averages from operations, stockholders
using common-size financial might be pleased that the
statements. company has no debt. In hard
times, interest payments might be
14-3 Price-earnings ratios reflect very difficult to meet.
investors’ expectations concerning On the other hand, if
future earnings. The higher the investments within the company
price-earnings ratio, the greater can earn a rate of return that
the growth in earnings investors exceeds the interest rate on debt,
expect. For this reason, two stockholders would get the
companies might have the same benefits of positive leverage if the
current earnings and yet have company took on debt.
quite different price-earnings
ratios. By definition, a stock with 14-8 The market value of a share
current earnings of $4 and a price- of common stock often exceeds
earnings ratio of 20 would be the book value per share. Book
selling for $80 per share. value represents the cumulative
effects on the balance sheet of
14-4 A rapidly growing tech past activities, evaluated using
company would probably have historical prices. The market value
many opportunities to make of the stock reflects investors’
investments at a rate of return expectations about the company’s
higher than stockholders could future earnings. For most
earn in other investments. It companies, market value exceeds
would be better for the company book value because investors
to invest in such opportunities anticipate future earnings growth.
than to pay out dividends and thus
one would expect the company to 14-9 A 2 to 1 current ratio might
have a low dividend payout ratio. not be adequate for several
reasons. First, the composition of
© The McGraw-Hill Companies, Inc., 2022. All rights reserved.
Solutions Manual, Chapter 14 2
, the current assets may be heavily low quality, including large
weighted toward slow-turning and amounts of accounts that may be
difficult-to-liquidate inventory, or difficult to collect.
the inventory may contain large
amounts of obsolete goods.
Second, the receivables may be
© The McGraw-Hill Companies, Inc., 2022. All rights reserved.
Solutions Manual, Chapter 14 3
