Question

P3–27 Complete ratio analysis, recognizing significant differences  Home Health, Inc., has

come to Jane Ross for a yearly financial checkup. As a first step, Jane has prepared a

complete set of ratios for fiscal years 2014 and 2015. She will use them to look for

significant changes in the company’s situation from one year to the next
a. To focus on the degree of change, calculate the year-to-year proportional change

by subtracting the year 2014 ratio from the year 2015 ratio and then dividing the

difference by the year 2014 ratio. Multiply the result by 100. Preserve the posi-

tive or negative sign. The result is the percentage change in the ratio from 2014

to 2015. Calculate the proportional change for the ratios shown here.

b. For any ratio that shows a year-to-year difference of 10% or more, state whether

the difference is in the company’s favor or not.

c. For the most significant changes (25% or more), look at the other ratios and cite

at least one other change that may have contributed to the change in the ratio

that you are discussing.​

Answer 1

Answer:

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