Refer to the following selected financial information from Fernandez Incorporated. Compute the company’s profit margin for Year 2.    Year 2 Year 1 Net sales $ 478,500   $ 426,250   Cost of goods sold   276,300     250,120   Interest expense   9,700     10,700   Net income before tax   67,250     52,680   Net income after tax   46,050     39,900   Total assets   317,100     288,000   Total liabilities   181,400     167,300   Total equity   135,700     120,700  

The balance sheet is based on the accounting equation.

The statement of cash flows explains how transactions and events impact the end-of-period cash balance to produce the end-of-period net income.

Southern Cross, Inc. is preparing the company’s statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from operating activities using the indirect method:        Net income $ 182,000 Gain on the sale of equipment   12,300 Proceeds from the sale of equipment   92,300 Depreciation expense—equipment   50,000 Payment of bonds at maturity   100,000 Purchase of land   200,000 Issuance of common stock   300,000 Increase in merchandise inventory   35,400 Decrease in accounts receivable   28,800 Increase in accounts payable   23,700 Payment of cash dividends   32,000

Increases in liability accounts are recorded as debits.

When preparing the operating activities section of the statement of cash flows using the direct method, non-operating losses are added to net income.

If a company is comparing this year’s financial performance to last year’s financial performance, it is using horizontal analysis.

Net income divided by average total assets is:

The return on common stockholder’s equity measures a company’s success in earning net income for its owners.

A simple tool that is widely used in accounting to represent a ledger account and to understand how debits and credits affect an account balance is called a: