1. Know the definition of sustainable income. Know the components of (variables used to calculate) sustainable income. 2. Know the income statement presentation of a disposal of a significant component of a business. 3. Know the definition, purpose, and reliability of pro forma income. 4. Know the three types of ratios and what each type evaluates. 5. When analyzing financial statements information, know what makes the results of the analysis meaningful or significant. 6. Know the formulas and the use of current ratio, profit margin, debt to assets ratio. 7. Calculate comprehensive income. 8. Know the number of years comparative balance sheets are prepared. 9. Know whether comparative data enhances the analysis of financial statements. 10. Describe horizontal analysis and its purpose. Know the formula for horizontal analysis of changes since the base period. 11. Describe vertical analysis and its purpose. 12. Know the base used for income statement items when preparing a vertical analysis of the income statement.