FOUNDATIONS OF ACCOUNTING FOR
PEREGRINE GLOBAL SERVICES
1. Financial statementsAnswer provide information that is useful for making investments and other
economic decisions about business
2. Horizontal analysisAnswer Analysis of percentage increases and decreases in financial statements across
time. The amount of each line item on the most recent statement is compared with the related item on earlier
statements, and expressed as a percentage change
3. Vertical analysisAnswer An percentage analysis that is used to show the relationship of each component to the
total
within a single statement.
The balance sheet is analyzed by stating each asset item as a percent of total assets. Each liability and stockholders
equity item is stated as a percent of total liabilities and stockholders equity.
4. Common side statements
Answer Horizontal and vertical analyses are useful in assessing trends, in relation-
,ships and financial conditions, and operations of a business
5. Common size income statements
Answer can compare to businesses or more
6. Solvency and profitability
Answer The ability of a business to repay its debts and earn income
7. Solvency analysis
Answer Focuses on the ability of a business to pay, or otherwise satisfy its current and noncurrent liabilities
8. Current position analysis, working capital
Answer Using metrics to assess a business, is ability to pay its current liabilities
9. Current ratio
Answer current assets divided by current liabilities
10. Quick ratio
Answer quick assets/current liabilities
11. Accounts Receivable analysis
Answer sales on account increase accounts receivable, whereas collections from customers decrease
,accounts receivable. It is desirable to collect receivables as promptly as possible. The cash generated by prompt
collections from customers may be used to pay or avoid current liabilities and be used in operations for purposes,
such as purchasing merchandise in large quantities at lower prices.
12. Accounts Receivable Turnover Ratio
Answer net credit sales/average net accounts receivable
13. number of days' sales in receivables
Answer Average Accounts Receivable / Average Daily Sales
14. Inventory turnover ratio
Answer cost of goods sold/average inventory
15. Ratio fixed assets to long-term liabilitiesAnswer ratio of fixed assets to long-term liabilities is a
solvency measure that indicates the margin of safety for node holders and bond holders. It also indicates the ability of
a business to borrow additional funds on a long-term basis.
16. Ratio of liabilities to stockholders equityAnswer Claims against the total assets of a business
are
divided into two groups, one claims of creditors and two claims of owners. The relationship between the total claims
, of the creditors and owners is a solvency measure that indicates the margin of safety for creditors.
PEREGRINE GLOBAL SERVICES
1. Financial statementsAnswer provide information that is useful for making investments and other
economic decisions about business
2. Horizontal analysisAnswer Analysis of percentage increases and decreases in financial statements across
time. The amount of each line item on the most recent statement is compared with the related item on earlier
statements, and expressed as a percentage change
3. Vertical analysisAnswer An percentage analysis that is used to show the relationship of each component to the
total
within a single statement.
The balance sheet is analyzed by stating each asset item as a percent of total assets. Each liability and stockholders
equity item is stated as a percent of total liabilities and stockholders equity.
4. Common side statements
Answer Horizontal and vertical analyses are useful in assessing trends, in relation-
,ships and financial conditions, and operations of a business
5. Common size income statements
Answer can compare to businesses or more
6. Solvency and profitability
Answer The ability of a business to repay its debts and earn income
7. Solvency analysis
Answer Focuses on the ability of a business to pay, or otherwise satisfy its current and noncurrent liabilities
8. Current position analysis, working capital
Answer Using metrics to assess a business, is ability to pay its current liabilities
9. Current ratio
Answer current assets divided by current liabilities
10. Quick ratio
Answer quick assets/current liabilities
11. Accounts Receivable analysis
Answer sales on account increase accounts receivable, whereas collections from customers decrease
,accounts receivable. It is desirable to collect receivables as promptly as possible. The cash generated by prompt
collections from customers may be used to pay or avoid current liabilities and be used in operations for purposes,
such as purchasing merchandise in large quantities at lower prices.
12. Accounts Receivable Turnover Ratio
Answer net credit sales/average net accounts receivable
13. number of days' sales in receivables
Answer Average Accounts Receivable / Average Daily Sales
14. Inventory turnover ratio
Answer cost of goods sold/average inventory
15. Ratio fixed assets to long-term liabilitiesAnswer ratio of fixed assets to long-term liabilities is a
solvency measure that indicates the margin of safety for node holders and bond holders. It also indicates the ability of
a business to borrow additional funds on a long-term basis.
16. Ratio of liabilities to stockholders equityAnswer Claims against the total assets of a business
are
divided into two groups, one claims of creditors and two claims of owners. The relationship between the total claims
, of the creditors and owners is a solvency measure that indicates the margin of safety for creditors.
