CHAPTER 12ANALYSIS OF AN ENTERPRISE

Through 11 chapters, we have looked at income statements, balance sheets, budget preparation, and budget reports, as well as the ingredients of these reports such as sales, cost of goods sold, expenses, assets, liabilities, and equity. We have looked a little more deeply into components such as depreciation, manufacturing cost, and long-term contract cost. We’ve talked about how to use the information in the reports, prepare budgets, and justify equipment purchases.

Time now to discuss one of the most important reasons for all the records and reports: Answering the question, “How is the enterprise doing?” (“Will it survive and will it prosper?”) Obviously, a business that is going to survive will have to make ...

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