Chapter 15: Q1TI (page 807)

Match the different parts of the annual report with the appropriate description.
1..Includes the income statement, balance sheet, statement of stockholders’ equity, and statement of cash flows
a. Notes to financial statements
2. Attests to the fairness of the presentation of the financial statements.
b. Report of independent registered public accounting firm
3. Includes a summary of significant accounting policies and explanations of specific items on the financial statements.
c. Management’s discussion and analysis of financial condition and results of operations (MD&A)
4. Is written by the company to help investors understand the results of operations and the financial condition of the company.
d. Financial statements

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Meaning of Financial Statement

A financial statement may be a formal record of interest in the operations and execution of a company's finances. To comply with GAAP in the United States, businesses frequently develop their financial statements on an accrual basis instead of a cash basis.

Matching the different parts of the annual report with the appropriate description

S.no.	Annual Report	Appropriate description
1	Includes the income statement, balance sheet, statement of stockholders’ equity, and statement of cash flows	d. Financial statements
2	Attests to the fairness of the presentation of the financial statements.	b. Report of independent registered public accounting firm
3	Includes a summary of significant accounting policies and explanations of specific items on the financial statements.	a. Notes to financial statements
4	Is written by the company to help investors understand the results of operations and the financial condition of the company.	c. Management’s discussion and analysis of financial condition and results of operations (MD&A)

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	THE PADDLE COMPANY Comparative Financial Statements Years Ended December 31			RECREATIONAL LIFE VESTS Comparative Financial Statements Years Ended December 31
Income statement	2019	2018	2017	2019	2018	2017
Net sales revenue	\(430,489	\)425,410		\(410,570	\)383,870
Cost of goods sold	258,756	256,797		299,110	280,190
Gross profit	171,733	168,613		111,460	103,680
Operating expenses	153,880	151,922		78,290	70,830
Operating income	17,853	16,691		33,170	32,850
Interest expenses	865	788		2,780	2,980
Income before income tax	16,988	15,903		30,390	29,870
Income tax expenses	5,137	4,809		8,780	8,630
Net income	\(11,851	\)11,094		\(21,610	\)21,240
Balance sheet

Assets
Cash & Cash Equivalents	\(69,159	\)70,793		\(65,730	\)55,270
Accounts Receivable	44,798	44,452	\(44,104	39,810	38,650	\)36,460
Merchandise Inventory	79,919	66,341	76,363	68,500	65,230	59,930
Other Current Assets	15,494	16,264		24,450	37,630
Total Current Assets	209,370	197,850		198,490	196,780
Long-term Assets	89,834	90,776		116,760	116,270
Total Assets	\(299,204	\)288,626	\(276,482	\)315,250	$$313,050	\(310,640

Liabilities
Current Liabilities	\)69,554	\(60,232		\)90,810	\(90,010
Long-term Liabilities	31,682	29,936		96,310	105,890
Total Liabilities	101,236	90,168		187,120	195,900

Stockholders’ Equity
Common Stock	72,795	80,885		111,530	102,480
Retained Earnings	125,173	117,573		16,600	14,670
Total Stockholders’ Equity	197,968	198,458		128,130	117,150	103,840
Total Liabilities and Stockholder’s Equity	\)299,204	\(288,626		\)315,250	\(313,050

Other data
Market price per share	\)21.38	\(33.82		\)46.37	$51.64
Annual dividend per share	0.32	0.30		0.53	0.45
Weighted average number of shares outstanding	9,000	8,000		9,000	8,000

a. Current ratio	h. Profit margin ratio
b. Cash ratio	i. Asset turnover ratio
c. Inventory turnover	j. Rate of return on common stockholders’ equity
d. Accounts receivable turnover	k. Earnings per share
e. Gross profit percentage	l. Price/earnings ratio
f. Debt ratio	m. Dividend yield
g. Debt to equity ratio	n. Dividend payout

	2018	2017
Cash	\(58,000	\)47,000
Short-term Investments	34,000	0
Net Accounts Receivable	140,000	124,000
Merchandise Inventory	217,000	272,000
Total Assets	530,000	565,000
Total Current Liabilities	288,000	205,000
Long-term Notes Payable	40,000	50,000
Income from Operations	165,000	158,000
Interest Expense	55,000	41,000

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Meaning of Financial Statement

Matching the different parts of the annual report with the appropriate description

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1..Includes the income statement, balance sheet, statement of stockholders’ equity, and statement of cash flows	a. Notes to financial statements
2. Attests to the fairness of the presentation of the financial statements.	b. Report of independent registered public accounting firm
3. Includes a summary of significant accounting policies and explanations of specific items on the financial statements.	c. Management’s discussion and analysis of financial condition and results of operations (MD&A)
4. Is written by the company to help investors understand the results of operations and the financial condition of the company.	d. Financial statements