Fundamentals of ABM

Jumpstart Activity 1: Read! Stop! Think! Directions: Let us look at the succeeding scenario. The following is the net income from the Statement of Comprehensive Income (SCI) of the two companies ( ABM Company and TVL Company) over the past five years were given to you. Year ABM Company TVL Company 2019 P1,400,000 $1,200,000 2018 1,380,000 1,180,000 2017 1,250,000 1,050,000 2016 1,150,000 1,000,000 2015 1,000,000 980,000 The two companies asked you to invest in them as part owner. However, you can only afford to give money to one company. Both of them are in the same industry. Looking at the Statement of Financial Position (SFP), you found out that ABM Company and TVL Company has reported total assets of $7,000,000 and P9,000,000 . . Given the above information, which company will you choose? Will it be TVL Company because the company reported higher total assets? Will it be ABM Company because it has a higher net income? Are the two companies profitable? Are the two companies' financial performance improving based on the five year data presented? As an investor, you should be digging into a company's financial statements on which of the two companies can give better returns for your money. However it is not enough to know the total assets and net income in order to address your concerns. We need tools and or techniques that can we use on the financial statement in order to have a better understanding of the business. Fortunately, there are three kinds of financial statements analysis techniques that we can perform that will help us look at SCI and SFP - they are: horizontal analysis, vertical analysis and financial ratios