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Making Accounting Connect with Students: Part 2-Personalize Financial Statement Analysis

Making Accounting Connect with Students: Part 2-Personalize Financial Statement Analysis

I have found financial statement analysis is difficult to teach from a textbook. Students generally are not interested in hypothetical companies that textbooks often provide. Also, effectively testing on financial statement analysis is extremely challenging. As an example on how I tested this on a written exam, I gave a balance sheet with a very small amount of accounts receivable and a high amount of inventory (as a percentages of total assets). Students were given ratios including accounts receivable turnover and inventory turnover. The question required students to first analyze the balance sheet to determine what asset account was most significant, select the most meaningful ratio, and justify why they chose the ratio. The test did not go very well for most students as the time to take... Show More

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