Respond to your Discussion topic after you have completed your Reading and the Learning Activity.

Topic: Application of Financial Statement Analysis Tools

In this Discussion you will analyze a companys performance by using specific ratios to help companies and investors in making the proper business and/or investment decisions. When evaluating a company, ratios will provide important clues to underlying conditions.

Scenario: Imagine you have passed your CPA exam and are now employed by a Fortune 500 company. Your boss tells you that as part of your new responsibilities you are to create pertinent ratios from the comparative financial statements. Address the checklist items based on the ratios below:

Pertinent Ratios:	2019	2020
Current ratio	4.3:1	3.4:1
Acid-test ratio	1.2:1	3.0:1
Asset turnover	3.8 times	4.2 times
Net income	up 40%	down 8%
Earnings per share	$5.30	$4.50

Checklist:

• Explain what tools you would use to analyze the following data, and why?
• Then discuss who would use this information.
• Which data illustrates the firms solvency?
• Which data relates to the firms going concern?
• Discuss the usefulness as well as limitations of the data.