ACC205: Principles of Accounting
Instructor: Emmett Denham
While inaccurate accounting can cause misleading information about the company, every successful company should develop an income statement and balance sheet when monitoring financial growth. Also, formulating a horizontal and ratio analysis creates an accurate trend of the company spending behavior and debt-to-ratio venerability. A balance sheet can be considered as the bloodline of the company, allowing a quick view of financial fluency which could be attractive to outside investors. Last but not least, the income statement presents a hard result of gains, liabilities, revenues and debt within a yearly …show more content…
This increase is a reflection of the current assets (e.g. property plant equipment, goodwill). Current assets seen a 8%-6% increase in year 2011 and 2012, while property plant equipment increase between 4%-5% and following up with goodwill estimated at 23% with another 4% in 2011. In year 2012, the debts increased to about 9% more since 2011 a 12% differential to year 2010.
These percentage calculations are tools to suggest the Walmart Corporation used more debts financially in year 2011 than year 2012. Equity financing in year 2012 increased 4% compared to the other years that was calculated only at 3%. Perhaps we should acknowledge that the reason for more aggressive equity financing can be credited to the retained earnings being that in year 2012 there was a 7% increase in comparison to 2011 which stood at 4%.
Importance behind the Horizontal Analysis Our text states that “A horizontal analysis