AC466 Unit 2 Common-Size Statement Set Example

Course	AC466 Fraud Detection and Financial Statement Analysis
Unit	Unit 2
Paper type	Common-size statement set
Length	About 540 words, 4 pages double-spaced
Format	APA 7 student paper
School	Purdue University Global
Program	BS in Accounting
Updated	October 2026

Free sample paper for AC466 Unit 2

Three Years Reduced to Shape: A Unit 2 Common-Size Statement Set for a Pool Equipment Maker

[Student Name]

Purdue University Global

AC466: Fraud Detection and Financial Statement Analysis

Unit 2 Common-Size Statement Set

[Instructor Name]

[Date]

Tidewell Pool Systems and every figure are composite; the textbooks cited are real.

What this part is doingNaming the four shifts in the lead tells the reader what the percentages reveal before the tables.

Income Statement as a Share of Revenue

Revenue is $409.2 million in 2023, $464.9 million in 2024 and $547.1 million in 2025, each set at 100 percent.

Cost of goods sold falls from 66.0 percent to 65.3 and then 64.0 percent, so gross margin rises from 34.0 to 34.7 to 36.0 percent. Selling and administrative expense falls from 22.0 to 20.0 to 19.0 percent, from $90.0 million to $93.0 million to $103.9 million. Operating margin therefore moves from 12.0 to 14.7 to 17.0 percent. Net income rises from 8.1 to 9.7 to 11.9 percent of revenue.

Balance Sheet as a Share of Total Assets

Total assets are $513.5 million, $583.3 million and $693.3 million. Trade receivables rise from 13.1 to 15.6 to 19.4 percent of total assets, from $67.3 million to $91.0 million to $134.5 million. A new line appears in 2025, noncurrent notes receivable from distributors, at 1.7 percent, or $12.0 million. Inventory slips from 11.2 to 10.7 to 10.2 percent. Cash falls from 8.2 to 6.5 to 3.2 percent.

Deferred Service Revenue Against Revenue

Deferred revenue on extended service plans falls from 5.1 percent of revenue in 2023 to 4.1 in 2024 and 2.5 in 2025, from $20.9 million to $13.7 million, even as units sold increased.

Four Shifts

First, gross margin. A 2.0-point rise would be welcome if costs had eased, but management's discussion reported higher copper, resin and freight costs in both years. Margin widening against rising inputs is a relationship that stopped holding. It may have an innocent cause, such as price increases or a richer product mix, but it calls for an explanation.

Percentages show which relationships changed even when every dollar figure is rising, and here receivables nearly doubled their share of assets while inventory and cash shrank, which is the opposite of what a company selling more for cash would show.

What this part is doingThe highlighted sentence explains what common-size statements reveal that dollar figures hide, the insight this unit rewards.

Second, selling and administrative expense. It grew in dollars but fell three points as a share of revenue. Some of that is scale; some may reflect cuts to items such as warranty administration that the notes will explain.

Third, receivables. Their share of total assets rose by more than six points in two years, and a new class of long-term notes from distributors appeared. Customers are being given longer to pay.

Fourth, deferred service revenue. Its share of revenue halved while units grew, so either fewer customers bought service plans or more of each plan's price is being recognized at the point of sale.

Each figure in millions sits beside its percentage, so a reader can tell when a ratio moved because its base did. Common-size analysis is a first screen; it points to lines for further work rather than explaining them (Penman, 2013). Fridson and Alvarez (2022) recommend reading a company's percentages against its own history and its industry's before drawing any conclusion, and the peer comparison follows in a later unit (Subramanyam, 2014).

What this part is doingEnding on what the screen can and cannot do sets up the analyses that follow.

References

Fridson, M. S., & Alvarez, F. (2022). Financial statement analysis: A practitioner's guide (5th ed.). Wiley.

Penman, S. H. (2013). Financial statement analysis and security valuation (5th ed.). McGraw Hill.

Subramanyam, K. R. (2014). Financial statement analysis (11th ed.). McGraw Hill.

What the AC466 Unit 2 assignment asks for

Unit 2 of AC466 asks you to restate several years of statements in common-size form and interpret the changes. Express every income statement line as a percentage of revenue and every balance sheet line as a percentage of total assets, for at least three years. Keep the dollar amounts beside the percentages so a reader can tell when a ratio moved because its base did. Add any specialized ratio the case calls for, such as deferred revenue against revenue. Then identify the most important shifts and explain each: what changed, the ordinary reason it might have happened, and the concern if that reason does not hold. Pay attention to relationships that move against evidence elsewhere in the filing, such as margins rising while input costs rise. Close by noting what the screen can and cannot establish. Cite financial statement analysis texts in APA 7.

How the AC 466 Unit 2 example is put together

The sample's income statement section shows cost of goods sold falling from 66.0 to 64.0 percent of revenue, selling expense from 22.0 to 19.0 and operating margin rising from 12.0 to 17.0. The balance sheet section shows receivables rising from 13.1 to 19.4 percent of assets, a new 1.7 percent line of distributor notes, and inventory and cash shrinking. Deferred service revenue falls from 5.1 to 2.5 percent of revenue. Four shifts are then examined: margin rising against reported copper, resin and freight costs; selling expense shrinking with scale; receivables lengthening with new notes; and deferred revenue halving while units grew. The highlighted sentence explains what percentages reveal that dollar growth hides. A closing paragraph cites Penman, Fridson and Alvarez, and Subramanyam on using the screen.

AC466 Unit 2 rubric: what earns full points

AC466 common-size sets earn credit for accurate percentages, clear presentation and interpretation that goes beyond describing the numbers. Graders check that each statement uses the right base and that dollar figures accompany percentages. The strongest work identifies shifts that conflict with other evidence in the filing, such as margins rising against cost pressure, rather than simply noting which lines grew. Each shift should carry an innocent explanation as well as the concern it raises. Specialized ratios that fit the case add depth. Recognizing that common-size analysis is a screen, pointing to lines for further work, shows judgment about its limits. Consistent decimals and labeled tables help. Accurate APA 7 references complete what Purdue Global grades here.

AC466 Unit 2 help: mistakes that cost points

Many Unit 2 sets compute percentages correctly and then describe every line, burying the shifts that matter. Others drop the dollar figures, so a reader cannot see whether a ratio moved because its base changed. Balance sheet lines are expressed against revenue. Rising margins are praised without checking management's comments on costs. Innocent explanations are never offered. The analysis claims to have found fraud from percentages alone. If your section assigned a specific company or years, our writers can build the set from its filings and interpret the shifts.

Get an AC466 Unit 2 example written to your instructions

Filings for the assigned company, or the figures a section supplied, are what the Unit 2 set is built from; attach them with the instructions as written and the rubric. Percentages are computed on stated bases, amounts kept beside them and the commentary ranked by what is hardest to explain. The first custom set is free and comes back inside 24-48h. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.

More AC466 papers and BS in Accounting samples

AC466 Unit 2 questions, answered

Why use total assets as the base for the balance sheet?

Because it lets every asset, liability and equity line be read as a share of the same whole, so a shift toward receivables or away from inventory is visible regardless of growth. Some sections accept total liabilities and equity, which gives the same figure. What matters is that one base serves the whole statement and is named in the heading.

Is a rising gross margin a red flag?

Not by itself. It becomes a question when it moves against the evidence around it, here input costs that management says rose in both years and peers whose margins fell. The set records the gain, offers product mix as the innocent reading and leaves the test to the benchmark unit, which is the order most rubrics expect.

Can the set be built on my assigned company's filings?

Yes. Send the company name or the statements your instructor provided, together with the prompt and rubric. Three years are restated on stated bases, amounts are kept beside the percentages, and the commentary ranks the shifts your company's numbers actually show, each set beside an ordinary explanation and the later unit that would test it.

Where can I find a free AC466 Unit 2 sample paper?

This page holds a complete AC466 Unit 2 common-size statement set for a composite pool equipment maker, with income statement and balance sheet percentages, four interpreted shifts and APA 7 references.

Why does the rising gross margin matter in AC466 Unit 2?

Margin rose from 34.0 to 36.0 percent while management reported higher copper, resin and freight costs. A margin widening against rising inputs is a relationship that stopped holding and needs an explanation.