Chapter 4

Profitability
Analysis

Copyright © 2011 Thomson South-Western, a part of the Thomson Corporation. Thomson, the Star logo, and
South-Western are trademarks used herein under license.
 Overview of Profitability Analysis

• Evaluates whether managers are effectively executing

a firm’s strategy.
• Helps to develop an understanding of a firm’s
performance to enable forecasts of future
performance.
• Approaches to understanding firm’s net income:

Chapter: 04 2
 Overview of Profitability Analysis

• Although firms must report comprehensive income,

net income remains the key
• measure of profitability and is more strongly
associated with stock returns.

Chapter: 04 3
Overview of Profitability Analysis (Contd.)

• Alternative transformations of measured net income:

• Earnings per share analysis
• Common-size analysis
• Percentage change analysis
• Alternative definitions of profits
• Rate of Return Metrics:
• Return on total assets
• Return on common equity

Chapter: 04 4
Alternative Approaches to Analyzing Net
Income

• ROA and ROCE can be broken down into measures of profit

margin, turnover, and leverage, which facilitate a deeper
understanding of how a firm is generating wealth for its
shareholders.
• Measures of margin, turnover, and leverage can be even more
deeply analyzed using various financial ratios prepared from
different line items in the financial statements
Chapter: 04 5
Earnings Per Share
• One of the most frequently used measures of
profitability.
• The only financial ratio that GAAP requires firms to
disclose on the face of the income statement.
• Covered explicitly by the opinion of the independent
auditor.
• Types of EPS:
• Basic EPS (Simple Capital Structure)
• Diluted EPS (Complex Capital Structure)

Chapter: 04 6
Calculating
EPS
Basic EPS (Simple Capital Structure)
• For firms that do not have:
• Outstanding convertible bonds or convertible preferred
stock that can be exchanged for shares of common stock.
• Options or warrants that holders can use to acquire
common stock.
• Basic EPS is calculated as: net income
available
Net Income - Preferred Stock Dividends to common
shareholders
Weighted Average Number of
Common Shares Outstandin g

Chapter: 04 7
Calculating
EPS

Chapter: 04 8
Calculating
EPS

Chapter: 04 9
Calculating EPS (Contd.)

Diluted EPS (Complex Capital Structure)

• For the firms that have Convertible securities and/or stock
options or warrants outstanding.
• Presents two EPS amounts: Basic EPS & Diluted EPS
• Diluted EPS reflects the dilution potential of convertible
securities, options, and warrants.
• Diluted EPS is calculated as:
Net Income - Preferred Stock Dividends  Adjustment s for Dilutive Securities
W eighted Average Weig hted Average Number
Number of Common  of Shares Issuable from
Shares Outstandin g Dilutive Securities

Chapter: 04 10
Calculating EPS (Contd.)

• Assumption: dilutive securities (convertible bonds and

convertible preferred stock and the exercise of stock options
and warrants) are converted to common shares as of the
beginning of the year.
• Adjustment of Nominator : The accountant adds back:
• interest expense (net of taxes) on convertible bonds and
• dividends on convertible preferred stock the firm subtracted in
computing net income attributable to common shareholders.
• any compensation expense recognized on the employee
stock options.
 Adjustment of Denominator
increase common shares for the additional shares that are
presumed to be issued at the beginning of the year
Chapter: 04 11
Calculating EPS (Contd.)

Chapter: 04 12
Criticisms of EPS
• It does not consider the amount of assets or capital
required to generate a particular level of earnings.
• Two firms with the same earnings and EPS are not
necessarily equally profitable.
• The number of shares of common stock outstanding
serves as a poor measure of the amount of capital in
use.
Despite the above criticisms of EPS as a measure of profitability, it remains
one of the focal points of announcements and is frequently used valuing
firms.

Chapter: 04 13
 Common-Size Analysis
• Converts financial statement line items into percentages of
either sales (for the income statement) or total assets (for the
balance sheet)
• Simple way of creating greater comparability across firms and
for same firm through time.
• Most frequently utilized in:
• Income statement: by expressing all line items scaled by
revenues.
• Balance sheet: by expressing all line items scaled by total
assets.
• Common scaling enables figures across firms and across time to
be more comparable.
Chapter: 04 14
Chapter: 04 15
Chapter: 04 16
 Common-Size Analysis

• The 2012 common-size figures suggest that Coca-Cola

shows a more favorable gross profit (revenues minus
cost of goods sold) of 60.3% of revenues, relative to
52.2% for PepsiCo.
• Selling, general, and administrative expenses are
lower for Coca-Cola at 36.9% of revenues relative to
38.1% for PepsiCo

Chapter: 04 17
 Common-Size Analysis

• The 2012 common-size figures suggest that Coca-Cola

shows a more favorable gross profit (revenues minus
cost of goods sold) of 60.3% of revenues, relative to
52.2% for PepsiCo.
• Selling, general, and administrative expenses are
lower for Coca-Cola at 36.9% of revenues relative to
38.1% for PepsiCo
• The substantial difference in gross profits contributes
to higher common-size net income for Coca-Cola
relative to PepsiCo.
Chapter: 04 18
 Common-Size Analysis

• The 2012 common-size figures suggest that Coca-Cola

shows a more favorable gross profit (revenues minus
cost of goods sold) of 60.3% of revenues, relative to
52.2% for PepsiCo.
• Selling, general, and administrative expenses are
lower for Coca-Cola at 36.9% of revenues relative to
38.1% for PepsiCo
• The substantial difference in gross profits contributes
to higher common-size net income for Coca-Cola
relative to PepsiCo.
Chapter: 04 19
 Common-Size Analysis

• To more deeply understand this comparison, you

must perform additional analysis. For example, higher
gross profit at Coca-Cola is due substantially to
greater presence and profitability in international
beverage markets, despite PepsiCo’s domestic
operations being more profitable than those of Coca-
Cola.

Chapter: 04 20
 Common-Size Analysis

The common-size analysis of profitability across firms

can be extended to time series analysis.
Coca-Cola’s gross profit has trended downwards from
64.4% in 2008 to 60.3% in 2012. In contrast, PepsiCo’s
gross profit has ranged between 52.2 and 54.1%, with
no clear trend.
The different trends suggest that Coca-Cola’s costs
are rising at a higher rate than increases in sales
revenue.

Chapter: 04 21
Percentage Change Analysis

• Computes percentage changes in individual line items.

• Can be compared across firms or across time.
• Focus is not on the financial data themselves, but on
the changes in individual line items through time.
• We can examine whether there are trends in gross
profits as a percentage of sales for PepsiCo relative to
Coca-Cola

Chapter: 04 22
Percentage Change Analysis

• For Example: PepsiCo’s revenue growth rate exceeded

that of Coca-Cola in 2010, but this reversed in 2011.
• When forecasting , a helpful starting point is to
examine prior percentage changes (and common-size
data) to identify trends that may persist in the future.

Chapter: 04 23
Alternative Definitions Of Profits

• Analysts use measures of past profitability to forecast

the firm’s future profitability.
• However, when you use measures of past profitability
to forecast the firm’s future profitability, the
emphasis is on those items that are expected to
persist.
• If net income in the recent past includes on
nonrecurring gains or nonrecurring losses, you might
decide to eliminate those items from past earnings
when forecasting future earnings.
Chapter: 04 24
Alternative Definitions Of Profits
• These may include:
• Comprehensive Income
• Operating Income, EBIT, EBITDA, and Other Profit Measures
• Segment Profitability
• Pro Forma, Adjusted, or Street Earning

Chapter: 04 25
Alternative Definitions Of Profits: Comprehensive
Income

• Such items include certain foreign currency

translation items, certain unrealized gains and losses
on investment securities and derivatives, and other
adjustments
• Because of the volatility and uncertainty surrounding
most of these items, they are generally not helpful for
predicting future income.

Chapter: 04 26
Alternative Definitions Of Profits:
Operating Income, EBIT, EBITDA, and Other Profit
Measures
• Helpful to examine profitability prior to considering a
variety of expenses that vary depending on different
organizational or capital structures.
• Thus, analysts are sometimes interested in analyzing
different levels of profitability, such as gross profit,
• operating income, EBIT, EBITDA, EBITDAR, NOPAT
- EBIT :earnings before interest and taxes
- EBITDA : earnings before interest, taxes, depreciation, and amortization
- EBITDAR : earnings before interest, taxes, depreciation, amortization, and rent
• NOPAT : net operating profits after tax;
• EBIAT: earnings before interest after tax.
Chapter: 04 27
Alternative Definitions Of Profits: Segment
Profitability

• The definition of segments follows the ‘‘management

approach,’’ which leaves the identification of
operating segments up to managers
• Most often, disclosure of segment profitability data is
presented in the footnotes to the financial
statements.

Chapter: 04 28
Alternative Definitions Of Profits: Segment
Profitability

Two Challenges:
[Link] variation in the details provided by firms, which
makes cross-sectional comparisons of segments
challenging.
[Link] often do not allocate all general and
administrative expenses to individual segments:
challenging to compare performance of a segment
within a multisegment firm to that of a pure-play firm,
for which such expenses are included on the income
statement
Chapter: 04 29
Alternative Definitions Of Profits:
Pro Forma, Adjusted, or Street Earnings
• Specific computations of ‘‘earnings’’ that exclude
certain line items and refer to such earnings as ‘‘pro
forma’’ or ‘‘adjusted’’ earnings.

Chapter: 04 30
Return On Assets
• The rate of ROA measures a firm’s success in using
assets to generate earnings independent of the
financing of those assets (interest expense)
• Measures ongoing profitability.
• Unusual or nonrecurring items (such as restructuring
charges), may be removed, net of tax.
• Return on Assets is calculated as:

Net Income  [(1 - Tax Rate)(Interest Expense)]  Minority Interest in Earnings

Average Total Assets

Chapter: 04 31
Adjustments for Nonrecurring or Special Items

• Some items affecting net income that may be

considered unusual or nonrecurring (such as
restructuring charges, court decision regarding tax
benefits).
• If the objective is to measure the profitability
performance for particular year, these items should
not be excluded.
• if the objective is to measure the sustainable
profitability, these items should be excluded.

Chapter: 04 32
Return On Assets : PepsiCo

Chapter: 04 33
 Return On Assets : PepsiCo
INCOME STATEMENT DATA 2012
Revenues 65,492
<Cost of goods sold> -31,291
Gross Profit 34,201
<Selling, general and administrative expenses> -24,970
<Amortization of intangible assets> -119 Numerator
Operating Profit 9,112 6,178+36 +
Interest income 91 [(1-0.35)*899)
<Interest expense> -899
Income before Tax 8,304 Tax Rate
<Income tax expense> -2,090
Net Income 6,214
Net income attributable to noncontrolling interests -36
Net Income attributable to common shareholders 6,178

Balance Sheet Data  2011 2012 denominator:

(72,882 + 74,638) / 2
Total Assets 72,882 74,638

Chapter: 04 34
Return On Assets : PepsiCo
PROFITABILITY FACTORS:
Year 2008 2009 2010 2011 2012

RETURN ON ASSETS (based on reported amounts):

Profit Margin for ROA 12.4% 14.4% 12.0% 10.6% 10.4%
x Asset Turnover 1.2 1.1 1.1 0.9 0.9
= Return on Assets 15.2% 16.4% 12.8% 10.0% 9.2%

RETURN ON ASSETS (excluding the effects of nonrecurring items):

Profit Margin for ROA 14.2% 14.2% 12.6% 11.4% 10.8%
x Asset Turnover 1.2 1.1 1.1 0.9 0.9
= Return on Assets 17.3% 16.2% 13.5% 10.8% 9.6%

Chapter: 04 35
Disaggregating ROA
• We obtain further insight into the behavior of ROA
by disaggregating it into profit margin and total
assets turnover (also simply referred to as assets
turnover) components.
ROA  Profit Margin for ROA x Assets Turnover
Where :
Adjusted Net Income
Profit Margin 
Sales
Sales
Assets Turnover 
AverageChapter:
Total04 Assets 36
Disaggregating ROA
ROA  Profit Margin for ROA x Assets Turnover
Where :
Adjusted Net Income
Profit Margin 
Sales
Sales
Assets Turnover 
Average Total Assets

Chapter: 04 37
 Disaggregating ROA
The assets turnover: indicates the firm’s
ability to use assets to generate sales.

Profit margin: indicates the firm’s ability to

use sales to generate profits.

Chapter: 04 38
 Disaggregating ROA

PROFITABILITY FACTORS:
Year 2008 2009 2010 2011 2012

RETURN ON ASSETS (based on reported amounts):

Profit Margin for ROA 12.4% 14.4% 12.0% 10.6% 10.4%
x Asset Turnover 1.2 1.1 1.1 0.9 0.9
= Return on Assets 15.2% 16.4% 12.8% 10.0% 9.2%

RETURN ON ASSETS (excluding the effects of nonrecurring items):

Profit Margin for ROA 14.2% 14.2% 12.6% 11.4% 10.8%
x Asset Turnover 1.2 1.1 1.1 0.9 0.9
= Return on Assets 17.3% 16.2% 13.5% 10.8% 9.6%

Chapter: 04 39
Analyzing the Profit Margin for
ROA
Sales
• Individual expenses
• Cost of goods sold
• Selling, General, and Administrative Expenses
• Income taxes
• Profit margin
• Segment data: Permits the analyst to examine ROA,
profit margin, and assets turnover at an additional
level of depth.

Chapter: 04 40
Analyzing Total Assets Turnover
Captures how efficiently assets are being utilized to
generate revenues.
Provides insight into changes in the total assets
turnover by examining turnover ratios:
Accounts receivable turnover- Indicates the average time
until firms collect accounts receivable in cash.
Inventory turnover- Indicates the length of time needed to
produce, hold, and sell inventories.
Fixed assets turnover- Measures the relation between
sales and the investment in property, plant, and
equipment.
Chapter: 04 41
 Return on Common
Shareholders’
Equity (ROCE)
• A measure of the profitability of common shareholder
investment in a firm, after deducting all costs of
financing from other sources (such as interest expense
on debt and required dividends on preferred stock, and
noncontrolling interests).
• ROA measures the profitability of operations before
considering the effects of financing. That is, ROA
ignores the proportion of debt versus equity financing
that a firm uses to finance the assets.
ROA maps into the valuation of cash flows or earnings to all investors, whereas ROCE
maps into the valuation of cash flows or earnings to equity investors
Chapter: 04 42
 Return on Common
Shareholders’
Equity (ROCE)
ROCE of PepsiCo for 2012, using :
• reported amounts of net income:

Net Income Attributable to common shareholders - Preferred Stock Dividends

Average Common Shareholders’ Equity

$6,214 - $36 - $7 = 28.5%

0.5* ($22,399 + $20,899)

• adjusted amounts of net income :

Adjusted Net Income Attributable to PepsiCo - Preferred Stock Dividends
Average Common Shareholders’ Equity

$6,483 - $7 = 29.9%
0.5* ($22,399 + Chapter:
$20,899)04 43
Return on Common
Shareholders’
Equity (ROCE)

Chapter: 04 44
 Return on Common
Shareholders’
Equity (ROCE)
ROCE of PepsiCo:
PROFITABILITY FACTORS:
Year 2008 2009 2010 2011 2012

RETURN ON COMMON EQUITY (based on reported amounts):

Profit Margin for ROCE 11.9% 13.7% 10.9% 9.7% 9.4%
x Asset Turnover 1.2 1.1 1.1 0.9 0.9
x Capital Structure Leverage 2.4 2.6 2.8 3.4 3.4
= Return on Common Equity 34.8% 40.8% 33.1% 30.7% 28.6%

RETURN ON COMMON EQUITY (excluding the effects of nonrecurring items):

Profit Margin for ROCE 13.6% 13.5% 11.5% 10.6% 9.9%
x Asset Turnover 1.2 1.1 1.1 0.9 0.9
x Capital Structure Leverage 2.4 2.6 2.8 3.4 3.4
= Return on Common Equity 39.9% 40.1% 35.0% 33.5% 29.9%
Chapter: 04 45
 Benchmarks for ROCE
• Is the computed ROCE (28.5% or 29.9%) is ‘‘good’’ or
‘‘bad’’ performance?
• Two main Benchmarks:
1. average ROCE of other firms
2. cost of common equity capital

Chapter: 04 46
 Benchmarks for ROCE
1. average ROCE of other firms
Pepsi (2012): (28.5% or 29.9%)

Firm / Firms Average Analysis

ROCE
(2012)
Cross-section of 10%-12% - PepsiCo is well above the
publicly traded firms average ROCE;
- PepsiCo’s ROCE is certainly
‘‘good’’ by this benchmark
Coca-Cola 27.7%, PepsiCo generated a slightly higher
ROCE than Coca-Cola

Chapter: 04 47
 Benchmarks for ROCE
2. cost of common equity capital
• Return demanded by common shareholders for a firm’s
use of their capital
• A firm that generates ROCE less than the cost of
common equity capital destroys value for shareholders,
whereas a firm that generates ROCE in excess of the
cost of capital creates value.
• Cost of equity capital for PepsiCo is estimated to be
7.5% (Chapter 11) PepsiCo generated an excess
return of 22.4% (29.9% – 7.5%).

Chapter: 04 48
 Relating ROA to
ROCE
• ROA measures operating performance independent
of financing.
• ROCE considers the cost of debt and preferred stock
financing.

Chapter: 04 49
 Relating ROA to ROCE

Each dollar of Creditors receive

pre-financing their return first in
earnings to the preferred dividend available for the
the form of interest
various amount common
providers of payments.
capital shareholders
Chapter: 04 50
 Relating ROA to ROCE

• Common practice: Using lower-cost creditor and preferred

stock capital to increase the return to common shareholders as
financial leverage or capital structure leverage.
To clarify the concept, consider two scenarios :
• Scenario 1: one common equity investor who invests $100 to
fund
• Scenario 2: one common equity investor invested only $10 and
borrowed $90 to have the same amount
• A firm generates ROA= 10%
• after-tax interest cost : 5%

Chapter: 04 51
 Relating ROA to ROCE

Net Income Preferred Stock Dividends

Average Common Shareholders’ Equity
Chapter: 04 52
 Relating ROA to ROCE

• Although the net income is lower in Scenario 2, the ROCE is

55%, much higher, reflecting the strategic use of leverage by
the equity investor.
• This example demonstrates the advantages of the strategic
use of financial leverage : to increase returns to equity
investors; deploying assets that generate 10% but partially
financing them with capital that costs only 5% generates
‘‘abnormal’’ returns.
• At the same time, increased leverage triggers greater risk
(Chapter 5).

Chapter: 04 53
 Disaggregating ROCE

ROCE can be further disintegrated into: profit margin for ROCE,

assets turnover, and capital structure leverage.

Leverage refers to use of debt to increase return to common stockholders

ROCE > ROA
When ROA > Cost of debt and Preferred stock financing.

Chapter: 04 54
 Disaggregating ROCE

• Profit margin: The numerator of profit margin for ROCE is net

income available to common shareholders, while the numerator
for profit margin for ROA is net income with after-tax interest
expense and noncontrolling interest added back.
• Assets turnover : identical to that used to disaggregate ROA
• capital structure leverage ratio : additional component measures
the degree to which a firm strategically utilizes financial leverage
to finance assets

Chapter: 04 55
 Disaggregation of PepsiCo’s
ROCE

PROFITABILITY FACTORS:
Year 2008 2009 2010 2011 2012

RETURN ON COMMON EQUITY (based on reported amounts):

Profit Margin for ROCE 11.9% 13.7% 10.9% 9.7% 9.4%
x Asset Turnover 1.2 1.1 1.1 0.9 0.9
x Capital Structure Leverage 2.4 2.6 2.8 3.4 3.4
= Return on Common Equity 34.8% 40.8% 33.1% 30.7% 28.6%

RETURN ON COMMON EQUITY (excluding the effects of nonrecurring items):

Profit Margin for ROCE 13.6% 13.5% 11.5% 10.6% 9.9%
x Asset Turnover 1.2 1.1 1.1 0.9 0.9
x Capital Structure Leverage 2.4 2.6 2.8 3.4 3.4
= Return on Common Equity 39.9% 40.1% 35.0% 33.5% 29.9%

Chapter: 04 56
Realized ROA versus Expected
ROA
• Realized ROA is derived from financial statement data for a
particular period and will not necessarily correlate perfectly
with expected returns.
• Reasons for this may be:
• Faulty assumptions were used in deriving expected ROAs.
• Changes in the environment.
• ROA is an incomplete measure of economic rates of return.

Chapter: 04 57
 Elements of risk - differences in ROAs
• Three elements of risk help in understanding
differences across firms and changes over time in
ROAs:
• Operating leverage: Refers to proportion of fixed costs
relative to variable costs.
• Cyclicality of Sales: Are sales sensitive to economic
conditions.
• Product Life Cycle: Relates to the stage and length of firm’s
product life.

Chapter: 04 58
Trade-Offs between Profit Margin and Assets
Turnover

ROA  Profit Margin for ROA x Assets Turnover

• Important to examine the differences between the
relative mix of profit margin and assets turnover.
• We must examine reasons for differences in the
relative mix of profit margin and assets turnover.
• Differences in ROA due to relative mix of profit
margin and assets turnover can be explained by:
• Microeconomic Theory (External economic factors )
• Business Strategy (Internal strategic factors )

Chapter: 04 59
Microeconomic Theory
• Capacity Constraint
• Firms and industries characterized by heavy fixed
capacity costs and lengthy periods required to add
new capacity operate under a Capacity Constraint.
• There is an upper limit on the size of assets
turnover achievable.
• Only way to increase ROA is to increase profit
margin.
• The firms usually achieve the high profit margin
through some form of entry barrier.

Chapter: 04 60
Microeconomic Theory
• Capacity Constraint
Therefore, such firms operate in the area of Exhibit 4.13
marked A .

Chapter: 04 61
Microeconomic Theory
(Contd.)
• Competitive Constraint
• Firms whose products are commodity-like where there
are few entry barriers and where competition is intense
operate under a competitive constraint
• There is an upper limit on the achievable level of profit
margin for ROA.
• Only way to improve ROA is to achieve high asset
turnover.
• Firms achieve the high assets turnovers by controlling
costs with aggressively low prices to gain market share.

Chapter: 04 62
Microeconomic Theory
(Contd.)
• Competitive Constraint
Therefore, such firms will operate in the area marked C

Chapter: 04 63
Microeconomic Theory
(Contd.)

• Firms that operate in the area of Exhibit 4.13 marked B are

not as subject to capacity or competitive constraints as
severe as those that operate in the tails of the ROA curves.
Therefore, they have more flexibility to take actions that
will increase profit margin for ROA, assets turnover, or
both to achieve a higher ROA.

Chapter: 04 64
Microeconomic Theory
(Contd.)

Chapter: 04 65
Microeconomic Theory
(Contd.)

Chapter: 04 66
Microeconomic Theory
(Contd.)
• Firms operating in area A might attempt to reposition the
capacity constraint to the right by outsourcing some of their
production. Such an action reduces the amount of fixed
assets needed per dollar of sales (that is, increases the fixed
assets turnover) but likely will reduce the profit margin for
ROA (because of the need to share some of the margin with
the outsourcing company).
• Firms operating in area C might add products with a higher
profit margin for ROA. Grocery stores, for example, have
added fresh flowers, salad bars, fresh bakery products, and
pharmaceutical prescription services to their product
offerings
Chapter: 04 67
Business Strategy
• Two generic alternative strategies for a particular
product are:
• Product differentiation strategy-
• Low-cost leadership strategy-

Chapter: 04 68
Business Strategy
Product differentiation strategy
Differentiate a product to obtain market power over
revenues and, therefore, profit margins.
The differentiation could relate to product
capabilities, product quality, service, channels of
distribution, or some other factor

Chapter: 04 69
Business Strategy
Low-cost leadership strategy-
Enabling the firm to charge the lowest prices and
to achieve higher sales volumes.
Such firms can achieve the low-cost position
through economies of scale, production
efficiencies, outsourcing, or similar factors or by
asset parsimony (maintaining strict controls on
investments in receivables, inventories, and
capital expenditures)

Chapter: 04 70
Business Strategy

Chapter: 04 71
 Summary
Differences in the profit margin for ROA–assets
turnover mix relate to:
•External economic factors (such as degree of
competition, extent of regulation, entry barriers, and
similar factors)
•Internal strategic choices (such as product
differentiation and low-cost leadership).
•The external and internal factors are, of course,
interdependent and dynamic.

Chapter: 04 72
Interpreting Financial Statement Ratios
(Contd.)

• Comparing with Other Firms

• Consider the following:
• Definition of the industry
Calculation of industry average
Distribution of ratios around the mean
Definition of financial statement ratios

Chapter: 04 73
Interpreting Financial Statement Ratios
• Comparing with Earlier Periods
• Raise the following questions:
Has the firm made a significant change in its product,
geographic, or customer mix?
Has the firm made a major acquisition or divestiture?
Has the firm changed its methods of accounting over
time?
Are there any unusual or nonrecurring amounts that
impair a comparable analysis of financial results across?

Chapter: 04 74