University of Houston Revenue Recogniction Horizontal Analysis Worksheet

I’m studying for my Accounting class and don’t understand how to answer this. Can you help me study?

1. Compute ROE for all three years reported on the income statement. (Hint: Do your companies report noncontrolling interest on the income statement and balance sheet? If so, make certain to use income available to the controlling interest (NICI) in the numerator and equity of the controlling interest (CI) in the denominator. To compute ROE for three years, we must determine average stockholders’ equity for three years, which means we need four balance sheet amounts. Because the balance sheets of each company will report only two years,we must collect prior years’ financial statements.

2.Compute the four ratios from Appendix 4B for the recent three years for each company: current ratio, quick ratio, liabilities-to-equity, and times interest earned.


  1. Revenue Recognition Revenue is the largest item on the income statement, and we must assess it on a quantitative and qualitative basis.
    • Use horizontal analysis to identify any time trends.
    • Read the management’s discussion and analysis (MD&A) section of the 10-K to learn how the companies’ senior managers explain revenue levels and changes.-Please summarize what you learned about the two companies.

e.g. (Links to an external site.)

I will list the 3 companies.

Prof. Angela


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