1- Using the KU Library, find an article that discusses techniques used to evaluate a company’s financial performance. What information can financial statement analysis provide? Include discussion of common tools for financial analysis such as horizontal analysis, vertical analysis and ratio analysis. Be sure to note your sources and in-text citations in proper APA format. 2- This week we cover 5 types of Adjusting Entries. Discuss the need for adjusting journal entries and give an example. Be specific and use different examples than those provided by your classmates.

Financial Performance

Some of the practical techniques used in the evaluation of an industry’s financial performance include its assets and liabilities evaluate the balance sheet since a company’s economic status. Moreover, the financial performance and positions also incorporate shareholder equity that is all presented to the shareholders through the balance sheet. There is also the use of a current ratio that is regarded as the entire existing assets divided by total current liabilities. The technique is essential in evaluating the ability of a business to fulfill its short-term obligations (Ngari & Muiruri, 2014). Some of the critical information that financial statement analysis provide include the general health of the business together with the past, modern and projected performance of the company. It is also significant to acknowledge that there are many techniques used as part of the financial statement evaluation; they include, a horizontal analysis that in turn compares two or several years of financial information in both dollar and percentage structure. The vertical study has various categories in which each account on the balance sheet is highlighted as a percentage of the entire report. Lastly, there is the ratio analysis that in turn calculates the statistical relationship between information.

Adjusting Journal

According to Debreceny, R. S., & Gray, G. L. (2010), an adjusting journal entry is an entry in fiscal coverage that happens at the end of a coverage period to record any existing income or operating cost of the period. One of the needs for adjusting journal entries is to indicate when the finances changed hands and to change real-time entries to entries that illustrate the accrual accounting mechanism. An adjusting journal entry engages an returns statement account together with a balance sheet account and strategically relates to the reports if accrued revenues, accrued expenses and paid expenses.

References

Debreceny, R. S., & Gray, G. L. (2010). Data mining journal entries for fraud detection: An exploratory study. International Journal of Accounting Information Systems, 11(3), 157-181.

Ngari, J. M. K., & Muiruri, J. K. (2014). Effects of financial innovations on the financial performance of commercial banks in Kenya.