Financial accounting slpIII

The Income Statement

The purpose of this SLP is to apply ratio analysis to assess the financial health of ABC Company. Use the income statement presented in the case during this module to compute general or overall profitability ratios. Compute three ratios using at least one of the income statement accounts. Some profitability ratios include both income and balance sheet accounts.

Assume that ABC Company is a small specialty retail store. IBIS is a comprehensive resource containing market research and statistics, which can be used to compare ABC Company to the industry and leaders in the industry. Comment on the profitability ratios by answering the following questions.

• What is the purpose of computing these particular ratios?
• What did you learn from reviewing the three ratios?
• What is your conclusion about the general and overall profitability of the company?
• How successful is ABC Company relative to the industry average and leaders in the small specialty retail store industry?

SLP Assignment Expectations

Show the formulas for the computations. Two to three sentences are sufficient to respond to the three questions. Do not use an essay format.

Show sources when appropriate and APA format is suggested, but not required.

• The objective for this assignment is to apply profitability ratios using income statement accounts.