Chapter 11
Financial Statement Analysis
585
Analysis
All three companies are public companies and thus prepare their financial statements in
accordance to IFRS. Does this mean that all values on their financial statements can be
compared without further investigation into how the values were calculated?
AP-17B (
3
4
5
)
The most recent income statements and balance sheets for Midland Company are shown
below.
Midland Company
Income Statement
For the Year Ended
2016
2015
Sales (on Credit)
$600,000
$540,000
Cost of Goods Sold
252,000
216,000
Gross Profit
348,000
324,000
Expenses
Salaries Expense
210,000
162,000
Depreciation Expense
48,000
54,000
Advertising Expense
60,000
54,000
Interest Expense
9,000
9,000
Total Expenses
327,000
279,000
Net Income before Taxes
21,000
45,000
Income Tax Expense
8,400
18,000
Net Income
$12,600
$27,000
