- Define
**trend analysis**with income statement and balance sheet accounts.

Review Trend Analysis of Financial Statements from *Managerial Accounting*.

- Define
**common-size analysis**. - How do managers use common-size analysis to analyze
**trends within a company**? - How do managers use common-size analysis to study
**competitors**?

A common-size analysis of an income statement reports income statement accounts as a percentage of net sales. A common-size analysis of a balance sheet report balance sheet accounts as a percentage of total assets.

Review Common-Size Analysis of Financial Statements fromProfitability ratios focus on the income statement.

- Define
**gross margin ratio**. - Define
**profit margin ratio**. - How do managers calculate
**return on assets**? - How do managers calculate
**return on common shareholders’ equity**? - How do managers calculate
**earnings per share**?

Short-term liquidity ratios focus on the short-term liabilities.

- Define the
**current ratio**. - Define the
**quick ratio**. - Define the
**receivables turnover ratio**. - How do managers calculate the
**average collections period**? - How do managers calculate the
**inventory ratio**. - Describe how to calculate the
**average sales period**.

Long-term solvency ratios focus on long-term liabilities.

- Define the
**debt-to-assets ratio**. - Define the
**debt-to-equity ratio**. - How do managers calculate
**times interest earned**?

Market valuation measures focus on the value of the company.

- How do managers calculate
**market capitalization**. - How do managers calculate
**price-earnings ratio**.

Review Ratio Analysis of Financial Information from *Managerial Accounting*.

- Identify measures that evaluate
**financial performance**. - Identify measures that evaluate the
**efficiency of business processes**. - Identify measures that track
**employee learning and growth**. - Identify measures that track
**customer relationships**.

Review Non-financial Performance Measures: The Balanced Scorecard from *Managerial Accounting*.

Review a sample balanced scorecard in Table 13.4 Balanced Scorecard Measures.

- Average collection period
- Average sales period
- Balanced scorecard
- Base-year
- Common-size analysis
- Current ratio
- Debt-to-assets ratio
- Debt-to-equity ratio
- Earnings per share
- Financial leverage
- Gross margin ratio
- Inventory turnover ratio
- Long-term solvency
- Market capitalization
- Market valuation
- Percent change
- Price earnings ratio
- Profit margin ratio
- Profitability
- Quick ratio
- Receivables turnover ratio
- Return on assets
- Return on common shareholders’ equity
- Short-term liquidity
- Times interest earned
- Trend analysis
- Vertical analysis

Last modified: Wednesday, July 17, 2019, 5:45 PM