350 words please
The balance sheet shows the financial picture of a business at a
given point in time. It is what the
organization owns versus what they owe.
The income statement shows the profit (or revenue-positive position) versus the loss of an organization
For this phase, utilize Merrill Lynch’s handout on reading financial statements. (Google )
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1. Using one year of the balance sheet, determine the organization’s liquidity through the current ratio
and debt-to-equity ratio. Use the table below and answer the questions.
Left Side Right Side
Current Assets ________ Current Liabilities _________
Fixed Assets _________ Long-Term Liabilities______
Other Assets __________ Shareholder Equity ________
a. What is the current ratio? Do you have enough current assets to meet your current liabilities?
Explain. (Refer to page 23 of the Merrill Lynch handout)
b. What is their debt-to-equity ratio? Total liabilities/total shareholder equity =
2. Using one year of the income statement, determine the organization’s profitability or fund balance
perspective through operating margin and net profit ratio. Use the table below and analyze the both
the operating margin and net profit ratio. Refer to page 31. Of the Merrill Lynch handout/link.
Operating Margin = Operating Income/net sales
Net Profit Margin= Net Income/net sales