Escolar Documentos
Profissional Documentos
Cultura Documentos
PowerPoint Authors:
Susan Coomer Galbreath, Ph.D., CPA
Charles W. Caldwell, D.B.A., CMA
Jon A. Booker, Ph.D., CPA, CIA
Cynthia J. Rooney, Ph.D., CPA
Winston Kwok, Ph.D., CA
Basics of Analysis
Application Involves
Reduces
of analytical transforming
uncertainty
tools data
Liquidity and
Solvency
efficiency
Market
Profitability
prospects
C1
Intracompany
Competitors
Industry
Guidelines
C2
Tools of Analysis
Horizontal Analysis
Comparing a company’s financial condition and
performance across time.
Vertical Analysis
Comparing a company’s financial condition and
performance to a base amount.
Ratio Analysis
Measurement of key relations between financial statement
items.
P1
Horizontal Analysis
P1
Comparative Statements
Calculate Change in Dollar Amount
Comparative Statements
Calculate Change as a Percent
Horizontal Analysis
Horizontal Analysis
Trend Analysis
Trend analysis is used to reveal patterns in data
covering successive periods.
Trend Analysis
Adidas
Income Statement Information
Using 2009 as the base year we will get the following trend information:
Trend Analysis
Vertical Analysis
Common-Size Statements
Statement
Common-Size Graphics
P3
Ratio Analysis
Liquidity
and Solvency
efficiency
Market
Profitability
prospects
P3
Working Capital
Working capital represents current assets financed
from long-term capital sources that do not require
near-term repayment.
Current assets
– Current liabilities
= Working capital
Current Ratio
Current Assets
Current Ratio =
Current Liabilities
Acid-Test Ratio
Cash + Short-term investments + Current
Acid-test ratio = receivables
Current Liabilities
Referred to as Quick Assets
This ratio is like the current ratio but excludes current assets
such as inventories and prepaid expenses that may be
difficult to quickly convert into cash.
P3
Inventory Turnover
Cost of goods sold
Inventory turnover =
Average inventory
A short-term liquidity
measure used to quantify
the rate at which a company
pays off its suppliers.
P3
Solvency
Debt
Ratio
Equity
Ratio
Debt-to-Equity
Ratio
Times
Interest
Earned
P3
Debt-to-Equity Ratio
Total liabilities
Debt-to-equity ratio =
Total equity
Net profit
+ Interest expense
+ Income taxes
= Income before interest and taxes
Profitability
Profit Return on
Margin Total Assets
Return on Ordinary
Shareholders’
Equity
P3
Profit Margin
Net profit
Profit margin =
Net sales
Market Prospects
Price-Earnings Dividend
Ratio Yield
P3
Price-EarningsMarket
Ratio price per ordinary share
Price-earnings ratio =
Earnings per share
Dividend Yield
Annual cash dividends per share
Dividend yield =
Market price per share
Analysis Reporting
A good analysis report usually consists of six sections:
1. Executive summary
2. Analysis overview
3. Evidential matter
4. Assumptions
5. Key factors
6. Inferences
End of Chapter 17