How should common size ratios be interpreted? Fermat Partet Formatting Table Sty
ID: 2588564 • Letter: H
Question
How should common size ratios be interpreted? Fermat Partet Formatting Table Styles Filter Se interpretation: 7 CODE 4 CHANGE 8 Statemeats of Financial Position 9Common Size Ratios 10 December 30 2017IlIllDecember 30, 2016 12 13 ASSETS 14 CASH AND CASH EQUIVALENTS 15 INTEREST AND DIVIDENDS RECEIVABLE 16 CAMPAIGNS PLEDGES RECEIVABLE 17 PREPAID EXPENSES AND OTHER 18 INVESTMENTS 19 20 TOTAL 21 22 LIABILITIES AND NET ASSETS 23 LIABILITIES 24 Accounts payable" DAV 14.359, 1,909,606 61.244 373.788 0.12% 16,244 044,193 52,582 3.22% 358,632 0.23% 25,367 2653039 2.81% 82 26% 10 944 9248670% 10000% 11,133013 1000% | 13.305,806 1 llllis4%( 910, 0.01% 171,550 1.52% 0.01% 201,721 25 Accounts payable other 1,017 26 Annuity payment liablity 27 Total liabilities 6949th 2.242.213 1111 41th 2.282.098 29 UNRESTRICTED NET ASSETS 30 31 TOTAL LIABLITIES and NET ASSETS 10000% 13305 806 100 00% 11133813 32 34 NOTE: the denominator aeeds to be the same for all aumbers: in this case, rotal assets 35 36 37 Interpretation 38 39 A. Common Size Balance She
Explanation / Answer
Through common size statement we can look into the structure of the company, and can compare it to different companies or of Industry. And tell that company has performed well or not from last year or is company growing well…etc
Interpretation means Analysis of the common size statement i.e. from above statement we can see that Last year Cash accounts for 9% of total assets whereas this year this is 14% which is good for business.
It can be seen that Investment share in total asset has decreased by 4%.
Interest and dividend received is consistent only with very minor changes.
Last year liabilities constitute 34.5% of total assets whereas this year it decreased and constitutes 30.5% of total assets which is good for the business organization as it is reducing its liabilities.
The share of unrestricted net assets has increased which is good for any business organization.
At last we can say that overall company has performed well from last year.
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