IS

Comprehensive income(2): more inclusive measure,  includes all changes in equity except for owner’s distribution and contribution  Net income  Other comprehensive income (3): Some that is …

Margin ratios Gross profit margin (47) Ratio of gross profit (revenue – cost of goods sold) to revenue Increased by:  Raising price or reducing production …

Common-size income statements (45) Express each category of income statement as a percentage of revenue Allow for comparing income statement elements over time and across …

Dilutive securities (41) Stock options, warrants, convertible debt, convertible preferred stock that decrease EPS  if converted to common stock. Anti-dilutive securities (42) Stock options, warrants, …

Earning per share (EPS) (36) Company profitability performance measure for public-traded firms Simple capital structure (37) Contain no potentially dilutive securities Only contain common stock, …

For nonfinancial firm:  Non-operating components May result from investment income and financing expenses Receive dividends and interest from investments in other firms Interest expense Based …

Change in accounting principle Change from GAAP or IFRS to another Inventory accounting from LIFO to FIFO Require retrospective application All prior-period are restated to …

Non-recurring items (33) Definition: A gain or loss found on a company’s income statement that is not expected to occur regularly. Discontinued operation (34) Operations …

It is possible for the firm to delay or accelerate recognition of expenses Delay recognition: increase current net income → more aggressive Bad debt expense …

Inventory expense recognition: identify the cost of inventories sold in the accounting period Specific identification method (24):  If the firm can identify exactly which items …