Financial Statement Analysis

Содержание

Слайд 2

Financial Statement Analysis Financial Statements A Possible Framework for Analysis Ratio

Financial Statement Analysis

Financial Statements
A Possible Framework for Analysis
Ratio Analysis
Trend Analysis
Common-Size and

Index Analysis
Слайд 3

Examples of External Uses of Statement Analysis Trade Creditors -- Focus

Examples of External Uses of Statement Analysis

Trade Creditors -- Focus on

the liquidity of the firm.
Bondholders -- Focus on the long-term cash flow of the firm.
Shareholders -- Focus on the profitability and long-term health of the firm.
Слайд 4

Examples of Internal Uses of Statement Analysis Plan -- Focus on

Examples of Internal Uses of Statement Analysis

Plan -- Focus on assessing

the current financial position and evaluating potential firm opportunities.
Control -- Focus on return on investment for various assets and asset efficiency.
Understand -- Focus on understanding how suppliers of funds analyze the firm.
Слайд 5

Primary Types of Financial Statements Income Statement A summary of a

Primary Types of Financial Statements

Income Statement
A summary of a firm’s revenues

and expenses over a specified period, ending with net income or loss for the period.

Balance Sheet
A summary of a firm’s financial position on a given date that shows total assets = total liabilities + owners’ equity.

Слайд 6

Basket Wonders’ Balance Sheet (Asset Side) a. How the firm stands

Basket Wonders’ Balance Sheet (Asset Side)

a. How the firm stands on

a specific date.
b. What BW owned.
c. Amounts owed by customers.
d. Future expense items already paid.
e. Cash/likely convertible to cash within 1 year.
f. Original amount paid.
g. Acc. deductions for wear and tear.

Cash and C.E. $ 90 Acct. Rec.c 394 Inventories 696 Prepaid Exp d 5 Accum Tax Prepay 10 Current Assetse $1,195 Fixed Assets (@Cost)f 1030 Less: Acc. Depr. g (329) Net Fix. Assets $ 701 Investment, LT 50 Other Assets, LT 223 Total Assets b $2,169

Basket Wonders Balance Sheet (thousands) Dec. 31, 2003a

Слайд 7

Basket Wonders’ Balance Sheet (Liability Side) a. Note, Assets = Liabilities

Basket Wonders’ Balance Sheet (Liability Side)

a. Note, Assets = Liabilities +

Equity.
b. What BW owed and ownership position.
c. Owed to suppliers for goods and services.
d. Unpaid wages, salaries, etc.
e. Debts payable < 1 year.
f. Debts payable > 1 year.
g. Original investment.
h. Earnings reinvested.

Notes Payable $ 290 Acct. Payablec 94 Accrued Taxes d 16 Other Accrued Liab. d 100 Current Liab. e $ 500 Long-Term Debt f 530 Shareholders’ Equity Com. Stock ($1 par) g 200 Add Pd in Capital g 729 Retained Earnings h 210 Total Equity $1,139
Total Liab/Equitya,b $2,169

Basket Wonders Balance Sheet (thousands) Dec. 31, 2003

Слайд 8

Basket Wonders’ Income Statement a. Measures profitability over a time period.

Basket Wonders’ Income Statement

a. Measures profitability over a time period.
b. Received,

or receivable, from customers.
c. Sales comm., adv., officers’ salaries, etc.
d. Operating income.
e. Cost of borrowed funds.
f. Taxable income.
g. Amount earned for shareholders.

Net Sales $ 2,211 Cost of Goods Sold b 1,599 Gross Profit $ 612 SG&A Expenses c 402 EBITd $ 210 Interest Expensee 59 EBT f $ 151 Income Taxes 60 EATg $ 91 Cash Dividends 38 Increase in RE $ 53

Basket Wonders Statement of Earnings (in thousands) for Year Ending December 31, 2003a

Слайд 9

Framework for Financial Analysis Analytical Tools Used Sources and Uses Statement

Framework for Financial Analysis

Analytical Tools Used
Sources and Uses Statement
Statement of Cash

Flows
Cash Budgets

1. Analysis of the funds
needs of the firm.

Trend / Seasonal Component
How much funding will be required in the future?
Is there a seasonal component?

Слайд 10

Framework for Financial Analysis Health of a Firm Financial Ratios 1.

Framework for Financial Analysis

Health of a Firm
Financial Ratios
1. Individually
2. Over time
3.

In combination
4. In comparison

1. Analysis of the funds
needs of the firm.

2. Analysis of the financial
condition and profitability
of the firm.

Слайд 11

Framework for Financial Analysis Examples: Volatility in sales Volatility in costs

Framework for Financial Analysis

Examples:
Volatility in sales
Volatility in costs
Proximity to break-even point

1.

Analysis of the funds
needs of the firm.

2. Analysis of the financial
condition and profitability
of the firm.

3. Analysis of the business
risk of the firm.

Business risk relates to the risk inherent in the operations of the firm.

Слайд 12

Framework for Financial Analysis A Financial Manager must consider all three

Framework for Financial Analysis

A Financial Manager must consider all three jointly

when determining the financing needs of the firm.

Determining
the
financing
needs of
the firm.

1. Analysis of the funds
needs of the firm.

2. Analysis of the financial
condition and profitability
of the firm.

3. Analysis of the business
risk of the firm.

Слайд 13

Framework for Financial Analysis Negotiations with suppliers of capital. Determining the

Framework for Financial Analysis

Negotiations
with
suppliers of
capital.

Determining
the
financing
needs of
the firm.

1. Analysis of

the funds
needs of the firm.

2. Analysis of the financial
condition and profitability
of the firm.

3. Analysis of the business
risk of the firm.

Слайд 14

Use of Financial Ratios Types of Comparisons Internal Comparisons External Comparisons

Use of Financial Ratios

Types of Comparisons
Internal Comparisons
External Comparisons

A Financial Ratio is

an index that relates two accounting numbers and is obtained by dividing one number by the other.
Слайд 15

External Comparisons and Sources of Industry Ratios Examples: Robert Morris Associates

External Comparisons and Sources of Industry Ratios

Examples:
Robert Morris Associates
Dun & Bradstreet
Almanac

of Business and Industrial Financial Ratios

This involves comparing the ratios of one firm with those of similar firms or with industry averages.
Similarity is important as one should compare “apples to apples.”

Слайд 16

Liquidity Ratios Current Current Assets Current Liabilities For Basket Wonders December

Liquidity Ratios

Current
Current Assets
Current Liabilities
For Basket Wonders December 31, 2003

Shows a firm’s

ability to cover its current liabilities with its current assets.

Balance Sheet Ratios

Liquidity Ratios

$1,195
$500

= 2.39

Слайд 17

Liquidity Ratio Comparisons BW Industry 2.39 2.15 2.26 2.09 1.91 2.01

Liquidity Ratio Comparisons

BW Industry
2.39 2.15
2.26 2.09
1.91 2.01

Year
2003
2002
2001

Current Ratio

Ratio is stronger than the industry average.

Слайд 18

Liquidity Ratios Acid-Test (Quick) Current Assets - Inv Current Liabilities For

Liquidity Ratios

Acid-Test (Quick)
Current Assets - Inv
Current Liabilities
For Basket Wonders December 31,

2003

Shows a firm’s ability to meet current liabilities with its most liquid assets.

Balance Sheet Ratios

Liquidity Ratios

$1,195 - $696
$500

= 1.00

Слайд 19

Liquidity Ratio Comparisons BW Industry 1.00 1.25 1.04 1.23 1.11 1.25

Liquidity Ratio Comparisons

BW Industry
1.00 1.25
1.04 1.23
1.11 1.25

Year
2003
2002
2001

Acid-Test Ratio

Ratio is weaker than the industry average.

Слайд 20

Summary of the Liquidity Ratio Comparisons Strong current ratio and weak

Summary of the Liquidity Ratio Comparisons

Strong current ratio and weak acid-test

ratio indicates a potential problem in the inventories account.
Note that this industry has a relatively high level of inventories.

Ratio BW Industry
Current 2.39 2.15
Acid-Test 1.00 1.25

Слайд 21

Current Ratio -- Trend Analysis Comparison

Current Ratio -- Trend Analysis Comparison


Слайд 22

Acid-Test Ratio -- Trend Analysis Comparison

Acid-Test Ratio -- Trend Analysis Comparison


Слайд 23

Summary of the Liquidity Trend Analyses The current ratio for the

Summary of the Liquidity Trend Analyses

The current ratio for the industry

has been rising slowly at the same time the acid-test ratio has been relatively stable.
This indicates that inventories are a significant problem for BW.

The current ratio for BW has been rising at the same time the acid-test ratio has been declining.

Слайд 24

Financial Leverage Ratios Debt-to-Equity Total Debt Shareholders’ Equity For Basket Wonders

Financial Leverage Ratios

Debt-to-Equity
Total Debt
Shareholders’ Equity
For Basket Wonders December 31, 2003

Shows the

extent to which the firm is financed by debt.

Balance Sheet Ratios

Financial Leverage
Ratios

$1,030
$1,139

= .90

Слайд 25

Financial Leverage Ratio Comparisons BW Industry .90 .90 .88 .90 .81

Financial Leverage Ratio Comparisons

BW Industry
.90 .90
.88 .90
.81 .89

Year
2003
2002
2001

Debt-to-Equity

Ratio

BW has average debt utilization
relative to the industry average.

Слайд 26

Financial Leverage Ratios Debt-to-Total-Assets Total Debt Total Assets For Basket Wonders

Financial Leverage Ratios

Debt-to-Total-Assets
Total Debt
Total Assets
For Basket Wonders December 31, 2003

Shows the

percentage of the firm’s assets that are supported by debt financing.

Balance Sheet Ratios

Financial Leverage
Ratios

$1,030
$2,169

= .47

Слайд 27

Financial Leverage Ratio Comparisons BW Industry .47 .47 .47 .47 .45

Financial Leverage Ratio Comparisons

BW Industry
.47 .47
.47 .47
.45 .47

Year
2003
2002
2001

Debt-to-Total-Asset

Ratio

BW has average debt utilization
relative to the industry average.

Слайд 28

Financial Leverage Ratios Total Capitalization Total Debt Total Capitalization For Basket

Financial Leverage Ratios

Total Capitalization
Total Debt
Total Capitalization
For Basket Wonders December 31, 2003

Shows

the relative importance of long-term debt to the long-term financing of the firm.

Balance Sheet Ratios

Financial Leverage
Ratios

$1,030
$1,669

= .62

(i.e., LT-Debt + Equity)

Слайд 29

Financial Leverage Ratio Comparisons BW Industry .62 .60 .62 .61 .67

Financial Leverage Ratio Comparisons

BW Industry
.62 .60
.62 .61
.67 .62

Year
2003
2002
2001

Total

Capitalization Ratio

BW has average long-term debt utilization
relative to the industry average.

Слайд 30

Coverage Ratios Interest Coverage EBIT Interest Charges For Basket Wonders December

Coverage Ratios

Interest Coverage
EBIT
Interest Charges
For Basket Wonders December 31, 2003

Indicates a firm’s

ability to cover interest charges.

Income Statement
Ratios

Coverage Ratios

$210
$59

= 3.56

Слайд 31

Coverage Ratio Comparisons BW Industry 3.56 5.19 4.35 5.02 10.30 4.66

Coverage Ratio Comparisons

BW Industry
3.56 5.19
4.35 5.02
10.30 4.66

Year
2003
2002
2001

Interest Coverage Ratio

BW has below average

interest coverage
relative to the industry average.
Слайд 32

Coverage Ratio -- Trend Analysis Comparison

Coverage Ratio -- Trend Analysis Comparison


Слайд 33

Summary of the Coverage Trend Analysis This indicates that low earnings

Summary of the Coverage Trend Analysis

This indicates that low earnings (EBIT)

may be a potential problem for BW.
Note, we know that debt levels are in line with the industry averages.

The interest coverage ratio for BW has been falling since 2001. It has been below industry averages for the past two years.

Слайд 34

Activity Ratios Receivable Turnover Annual Net Credit Sales Receivables For Basket

Activity Ratios

Receivable Turnover
Annual Net Credit Sales
Receivables
For Basket Wonders December 31, 2003

Indicates

quality of receivables and how successful the firm is in its collections.

Income Statement /
Balance Sheet
Ratios

Activity Ratios

$2,211
$394

= 5.61

(Assume all sales are credit sales.)

Слайд 35

Activity Ratios Avg Collection Period Days in the Year Receivable Turnover

Activity Ratios

Avg Collection Period
Days in the Year
Receivable Turnover
For Basket Wonders December

31, 2003

Average number of days that receivables are outstanding.
(or RT in days)

Income Statement /
Balance Sheet
Ratios

Activity Ratios

365
5.61

= 65 days

Слайд 36

Activity Ratio Comparisons BW Industry 65.0 65.7 71.1 66.3 83.6 69.2

Activity Ratio Comparisons

BW Industry
65.0 65.7
71.1 66.3
83.6 69.2

Year
2003
2002
2001

Average Collection Period

BW has improved the average collection
period

to that of the industry average.
Слайд 37

Activity Ratios Payable Turnover (PT) Annual Credit Purchases Accounts Payable For

Activity Ratios

Payable Turnover (PT)
Annual Credit Purchases
Accounts Payable
For Basket Wonders December 31,

2003

Indicates the promptness of payment to suppliers by the firm.

Income Statement /
Balance Sheet
Ratios

Activity Ratios

$1551
$94

= 16.5

(Assume annual credit
purchases = $1,551.)

Слайд 38

Activity Ratios PT in Days Days in the Year Payable Turnover

Activity Ratios

PT in Days
Days in the Year
Payable Turnover
For Basket Wonders December

31, 2003

Average number of days that payables are outstanding.

Income Statement /
Balance Sheet
Ratios

Activity Ratios

365
16.5

= 22.1 days

Слайд 39

Activity Ratio Comparisons BW Industry 22.1 46.7 25.4 51.1 43.5 48.5

Activity Ratio Comparisons

BW Industry
22.1 46.7
25.4 51.1
43.5 48.5

Year
2003
2002
2001

Payable Turnover in Days

BW has improved the PT in

Days.
Is this good?
Слайд 40

Activity Ratios Inventory Turnover Cost of Goods Sold Inventory For Basket

Activity Ratios

Inventory Turnover
Cost of Goods Sold
Inventory
For Basket Wonders December 31, 2003

Indicates

the effectiveness of the inventory management practices of the firm.

Income Statement /
Balance Sheet
Ratios

Activity Ratios

$1,599
$696

= 2.30

Слайд 41

Activity Ratio Comparisons BW Industry 2.30 3.45 2.44 3.76 2.64 3.69

Activity Ratio Comparisons

BW Industry
2.30 3.45
2.44 3.76
2.64 3.69

Year
2003
2002
2001

Inventory Turnover Ratio

BW has a very poor inventory turnover

ratio.
Слайд 42

Inventory Turnover Ratio --Trend Analysis Comparison

Inventory Turnover Ratio --Trend Analysis Comparison


Слайд 43

Activity Ratios Total Asset Turnover Net Sales Total Assets For Basket

Activity Ratios

Total Asset Turnover
Net Sales
Total Assets
For Basket Wonders December 31, 2003

Indicates

the overall effectiveness of the firm in utilizing its assets to generate sales.

Income Statement /
Balance Sheet
Ratios

Activity Ratios

$2,211
$2,169

= 1.02

Слайд 44

Activity Ratio Comparisons BW Industry 1.02 1.17 1.03 1.14 1.01 1.13

Activity Ratio Comparisons

BW Industry
1.02 1.17
1.03 1.14
1.01 1.13

Year
2003
2002
2001

Total Asset Turnover Ratio

BW has a weak total asset

turnover ratio.
Why is this ratio considered weak?
Слайд 45

Profitability Ratios Gross Profit Margin Gross Profit Net Sales For Basket

Profitability Ratios

Gross Profit Margin
Gross Profit
Net Sales
For Basket Wonders December 31, 2003

Indicates

the efficiency of operations and firm pricing policies.

Income Statement /
Balance Sheet
Ratios

Profitability Ratios

$612
$2,211

= .277

Слайд 46

Profitability Ratio Comparisons BW Industry 27.7% 31.1% 28.7 30.8 31.3 27.6

Profitability Ratio Comparisons

BW Industry
27.7% 31.1%
28.7 30.8
31.3 27.6

Year
2003
2002
2001

Gross Profit Margin

BW has a weak Gross Profit Margin.

Слайд 47

Gross Profit Margin -- Trend Analysis Comparison

Gross Profit Margin -- Trend Analysis Comparison


Слайд 48

Profitability Ratios Net Profit Margin Net Profit after Taxes Net Sales

Profitability Ratios

Net Profit Margin
Net Profit after Taxes
Net Sales
For Basket Wonders December

31, 2003

Indicates the firm’s profitability after taking account of all expenses and income taxes.

Income Statement /
Balance Sheet
Ratios

Profitability Ratios

$91
$2,211

= .041

Слайд 49

Profitability Ratio Comparisons BW Industry 4.1% 8.2% 4.9 8.1 9.0 7.6

Profitability Ratio Comparisons

BW Industry
4.1% 8.2%
4.9 8.1
9.0 7.6

Year
2003
2002
2001

Net Profit Margin

BW has a poor Net Profit

Margin.
Слайд 50

Net Profit Margin -- Trend Analysis Comparison

Net Profit Margin -- Trend Analysis Comparison


Слайд 51

Profitability Ratios Return on Investment Net Profit after Taxes Total Assets

Profitability Ratios

Return on Investment
Net Profit after Taxes
Total Assets
For Basket Wonders December

31, 2003

Indicates the profitability on the assets of the firm (after all expenses and taxes).

Income Statement /
Balance Sheet
Ratios

Profitability Ratios

$91
$2,160

= .042

Слайд 52

Profitability Ratio Comparisons BW Industry 4.2% 9.8% 5.0 9.1 9.1 10.8

Profitability Ratio Comparisons

BW Industry
4.2% 9.8%
5.0 9.1
9.1 10.8

Year
2003
2002
2001

Return on Investment

BW has a poor

Return on Investment.
Слайд 53

Return on Investment – Trend Analysis Comparison

Return on Investment – Trend Analysis Comparison


Слайд 54

Profitability Ratios Return on Equity Net Profit after Taxes Shareholders’ Equity

Profitability Ratios

Return on Equity
Net Profit after Taxes
Shareholders’ Equity
For Basket Wonders December

31, 2003

Indicates the profitability to the shareholders of the firm (after all expenses and taxes).

Income Statement /
Balance Sheet
Ratios

Profitability Ratios

$91
$1,139

= .08

Слайд 55

Profitability Ratio Comparisons BW Industry 8.0% 17.9% 9.4 17.2 16.6 20.4

Profitability Ratio Comparisons

BW Industry
8.0% 17.9%
9.4 17.2
16.6 20.4

Year
2003
2002
2001

Return on Equity

BW has a

poor Return on Equity.
Слайд 56

Return on Equity -- Trend Analysis Comparison

Return on Equity -- Trend Analysis Comparison


Слайд 57

Return on Investment and the Du Pont Approach ROI2003 = .041

Return on Investment and the Du Pont Approach

ROI2003 = .041 x

1.02 = .042 or 4.2%
ROIIndustry = .082 x 1.17 = .098 or 9.8%

ROI = Net profit margin X
Total asset turnover

Earning Power = Sales profitability X
Asset efficiency

Слайд 58

Return on Equity and the Du Pont Approach ROE2003 = .041

Return on Equity and the Du Pont Approach

ROE2003 = .041 x

1.02 x 1.90 = .080
ROEIndustry = .082 x 1.17 x 1.88 = .179

Return On Equity = Net profit margin X
Total asset turnover X
Equity Multiplier

Equity Multiplier =

Total Assets

Shareholders’ Equity

Слайд 59

Summary of the Profitability Trend Analyses The profitability ratios for BW

Summary of the Profitability Trend Analyses

The profitability ratios for BW have

ALL been falling since 2001. Each has been below the industry averages for the past three years.
This indicates that COGS and administrative costs may both be too high and a potential problem for BW.
Note, this result is consistent with the low interest coverage ratio.
Слайд 60

Summary of Ratio Analyses Inventories are too high. May be paying

Summary of Ratio Analyses

Inventories are too high.
May be paying off creditors

(accounts payable) too soon.
COGS may be too high.
Selling, general, and administrative costs may be too high.
Слайд 61

Common-size Analysis An analysis of percentage financial statements where all balance

Common-size Analysis

An analysis of percentage financial statements where all balance sheet

items are divided by total assets and all income statement items are divided by net sales or revenues.
Слайд 62

Basket Wonders’ Common Size Balance Sheets

Basket Wonders’ Common Size Balance Sheets

Слайд 63

Basket Wonders’ Common Size Balance Sheets

Basket Wonders’ Common Size Balance Sheets

Слайд 64

Basket Wonders’ Common Size Income Statements

Basket Wonders’ Common Size Income Statements

Слайд 65

Index Analyses An analysis of percentage financial statements where all balance

Index Analyses

An analysis of percentage financial statements where all balance sheet

or income statement figures for a base year equal 100.0 (percent) and subsequent financial statement items are expressed as percentages of their values in the base year.
Слайд 66

Basket Wonders’ Indexed Balance Sheets

Basket Wonders’ Indexed Balance Sheets

Слайд 67

Basket Wonders’ Indexed Balance Sheets

Basket Wonders’ Indexed Balance Sheets

- Предыдущая
Аттестационная работа. Методическая разработка. Как выполнить исследовательскую работу
Следующая -
Вклад мусульман в развитие географии и мореплавания

Похожие презентации

Портфельное инвестрование. Сущность и виды инвестиционного портфеля
Понятие себестоимости. Роль себестоимости в обеспечении конкурентоспособности продукции предприятия
Источники финансирования инвестиционной деятельности
Государственный долг. Долговая политика РФ на современном этапе
VentureMeet_МИК_общая_18-08-22-1 (3)
Деньги. Кредит. Банки
Налоги и налогообложение. Теоретические основы налогообложения. Налоговая система РФ
Информация по выписке счет-фактуры за наличный расчет ТОО Газпром нефть-Казахстан
Stock Market
Расчетная работа ОАО Мечел. Аналитический баланс, вертикальный и горизонтальный анализ
Содержание и принципы межбюджетных отношений
Типовой вариант экзамена
Конвенция Юнситрал о международных переводных векселях и международных простых векселях
Кредитные карты. Кредит Европа Банк
Программа смешанного страхования жизни Гармония жизни
Своя игра. Налогообложение
Ценообразование на мировом рынке товаров и услуг
Концепция консолидированного бюджета Белгородской области
Доходный подход
Аудит кредиторской задолженности
История развития страхования в 21 веке в Германии
Учёт расчётных операций
Дебетовые карты
Презентация Болдинова
Основи фінансової діяльності підприємства. Тема 6
Программа страхования имущества при оплате коммунальных платежей
Финансовый ликбез
Управление дебиторской задолженностью и денежными активами предприятия
Вы можете прислать нам Вашу презентацию и мы опубликуем ее на сайте.
Обратная связь
Для правообладателей
Email: Нажмите что бы посмотреть