How can you compare numbers by using a common size income statement?
After reading Chapter 2, you are tasked with constructing a fictitious balance sheet and income statement with fictitious numbers for your establishment (e.g., Disney World, Marriott Hotel, Olive Garden Restaurant, etc.).
Hint: Try to list your numbers in a chronological order, which means that your assets must follow the order of liquidity.
Learning Reflection: Consider what you’ve learned in this week’s chapter. How can you apply what you’ve learned at your current place of business? If you were asked to advise the board, what changes would you suggest? How do you look at and analyze numbers?
How can you compare numbers by using a common size income statement? For instance, your sales are $1,000,000 and your cost of goods sold is $500,000. What can you conclude? What recommendations can you provide?
List some examples of financial statements.
What is the source of the balance sheet’s name? Why is it named “balance sheet”?