FINANCE Lecture Notes - Cash Flow Statement, Accrual, Financial Transaction

Based on ISBN 978-1-285-19090-7===Financial Reporting, Financial Statement Analysis and Valuation, 8th Edition

Relying on Accounting to Avoid Forecast Errors

Chapter 10 of the textbook states that forecasts of financial statements should rely on the additivity within financial statements and the articulation across financial statements to avoid internal inconsistencies in forecasts. Explain how the concepts of additivity and articulation apply to financial statement forecasts. Also explain how these concepts can help you avoid potential forecast errors.

Refer to the Metroplois Health System (MHS) case study in Chapter 28.

Required

1. Set up a work sheet for the liquidity ratios.

Compute the profitability ratios using the Chapter 28 MHS financial Statements.

Chapter 3 Case: Ratios and Financial Planning at S&S Air, Inc.