1. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 15-2 Analyzing an Income Statement  Component percentages  Income statement showing a net loss  Correcting unacceptable component percentages  Financial ratios

2. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Competency: Understanding the Accounting Cycle for a Merchandising Business 2 LESSON 15-2 Objectives: 66 Prepare financial statements for a merchandising business 67 Analyze financial statements for a merchandising business

3. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3 LESSON 15-2 ANALYZING AN INCOME STATEMENT SHOWING A NET LOSS page 457

4. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 LESSON 15-2 Price-Earnings Ratio = Earnings per Share ÷ Market Price per Share Earnings per Share = Number of Shares Outstanding ÷ Net Income after Federal Income Tax FINANCIAL RATIOS page 459 Earnings per Share Price-Earnings Ratio $32.13=2,500÷$80,313.95 10.7=$32.13÷$345.00

5. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 15-2 TERMS REVIEW financial ratio earnings per share price-earning ratio page 460