Escolar Documentos
Profissional Documentos
Cultura Documentos
Copyright 2008 PresentationFx.com | Redistribution Prohibited | Image woodsy/sxc.hu | This text section may be deleted for presentation .
Financial statements
Shows the results of operations and the financial condition of an enterprise
income statement and the balance sheet
relationship of items with each other provides indicators that lead to a meaningful analysis of the operations of the enterprise
Financial Ratios
indicators of relationships
between figures within statements between the income statement and the balance sheet
Used to show whether a situation has improved or gotten worse or in order to determine a pattern
0
Internal Comparison
Analyze ratios from a historical perspective determine trend of the ratios and compare to expected future ratios for the company to assist management in decision making
External Comparison
Compare ratios of the firm with the ratios of various firms or with the industry averages during a period Gives insight into the financial conditions performance of the firm relative and
Profitability Ratios
shows whether the business is earning enough given the total amount of money invested in it *liquid vs solvent vs profitable
Balance Sheet
ASSETS
Current Assets Cash P
Accounts receivable
Inventory
20,000.00
4700.00
Accrued liabilities
Total current liabilities
1,200.00
7,900.00
300.00 27,300.00
Long-term liabilities
30,000.00 37,900.00
42,700.00
1,100.00
35,000.00
6,000.00
41,600.00
Total owners equity 41,000.00
78,900.00
Income Statement
Sales Less: Cost of sales Gross profit on sales Less: Operating Expense Salary Rental Commissions Delivery Expense Professional fees Taxes Light and water Net income before interest and taxes Less: Interest expense Income from operations Les: Income tax Net profit for the month P 30,000 1,200 18,000 P 4,000 600 2,000 400 1,000 800 200
SHIRT TALES T-SHIRT PRINITNG For the month ended, December 31, 2012
Formula
Gross Profit Sales =18,000 30,000
Explanation
o Measures the total margin to cover operating expenses and yield a profit Key indicator of firms average mark-up obtained on products sold and measures the firms ability to pass along its increased costs to its customers
o
=60% 9,000 9,000 500 8,500 2,500 P 6,000
Explanation Indicates the net income percentage on products sold. A measure of the firms overall profitability
Return on sales
ASSETS
Current Assets Cash Accounts receivable Inventory Prepaid expense Total current assets P 2,300.00
Formula Net Income After Taxes Total assets 6,000 78,900 =7.6%
Explanation Reflects how the firm has earned from the investment of all its financial resources A key measure of managements performance in using assets to generate profits
35,000.00 7,700.00
42,700.00
1,100.00 41,600.00
10,000.00 P 78,900.00
2,500 P 6,000
Return on investments
Les: Income tax Net profit for the month 2,500 P 6,000
Formula Net Income After Taxes o Long term liabilities + capital 6,000 71,000 =8.4%
Explanation Measures how much the firm has earned on the funds provided by the owners and long-term creditors
Long-term liabilities DBP Loan Total liabilities Owners Equity Shirt Tales, Capital Accumulated Profits 35,000.00 6,000.00 30,000.00 37,900.00
41,000.00
Return on equity
Net profit for the month
P 6,000
Explanation Shows the return you, as the owner, would receive on your investment in the business. Measures firms overall performance.
Liquidity Ratios
These ratios determine the firms ability to meet its maturing short-term obligations using its current assets. *billionaire in starbucks
Current assets are those expected to be converted into cash within the business cycle.
are cash itself, securities, inventories and account receivables.
current liabilities are obligations that would come due within a year.
notes/accounts payable, taxes payable and accruals.
Explanation Measures the ability of the firm to meet its current liabilities through assets that may readily be converted into cash Typically, a current ratio of 2:1 is suggested to meet the firms obligations
27,300 7,900
=3.46:1
Acid-Test Ratio
ASSETS
Current Assets Cash Accounts receivable Inventory Prepaid expense Total current assets
Explanation Expresses the firms ability to pay-off short term obligations with cash and assets convertible to cash without relying on the sale of inventories An acid-test ratio is the rule of thumb for the firm in meeting its current obligations
Debt-Equity
Formula
Long-term liabilities
DBP Loan Total liabilities Owners Equity Shirt Tales, Capital Accumulated Profits 35,000.00 6,000.00 30,000.00 37,900.00
Explanation o The ratio expresses the relationship between capital contributed by long-term creditors and owners capital The lower the ratio, the less the debt pressure and the greater the protection from creditors
o =0.92:1
41,000.00
Activity Ratios
helpful in evaluating the small firms performance and showing how effectively the business employs its resources
*net of depreciation
Formula
Sales P 30,000
Explanation o Measures the contribution of fixed assets to sales and how fixed assets are utilized
*net of depreciation
Explanation o Measures the contribution of total assets to sales and how total assets are utilized
Total assets
P 78,900.00