n Financial Statement Analysis n Dollar and Percentage Changes n Common Sized Statements n Ratio Analysis McGraw-Hill /Irwin McGraw-Hill /Irwin
|
|
- Moris Nicholson
- 5 years ago
- Views:
Transcription
1 14-1 Today s Agenda Management Accounting Lecture 3 (Chapter 14) Financial Statement Analysis Bangor University Transfer Abroad Programme n Financial Statement Analysis n Dollar and Percentage Changes n n Common Sized Statements n Vertical Analysis n Analysis Cautions n Be sure to recognize differences in accounting methods before coming to conclusions n Are costs skewed towards COGS? n Inventory valuation n Depreciation policy Limitations of Financial Statement Analysis Differences in accounting methods between companies sometimes make comparisons difficult. n Need to look beyond the numbers n Economic conditions n Industry trends, consumer tastes n Technical changes, changes within the company We use the LIFO method to value inventory. We use the FIFO method to value inventory. Limitations of Financial Statement Analysis Statements in Comparative and Common-Size Form Industry trends Technological changes Changes within the company Analysts should look beyond the ratios. Consumer tastes Economic factors Analytical techniques used to examine relationships among financial statement items Dollar and percentage changes on statements Common-size statements s
2 14-2 Horizontal analysis shows the changes between years in the financial data in both dollar and percentage form. Calculating Change in Dollar Amounts Dollar Change Current Year Figure Base Year Figure The dollar amounts for 2007 become the base year figures. Calculating Change as a Percentage Comparative Balance Sheets December 31 Percentage Change Dollar Change Base Year Figure 100% Increase (Decrease) Amount % Assets Current assets: Cash $ 12,000 $ 23,500 $ (11,500) (48.9) Accounts receivable, net 60,000 40,000 Inventory 80, ,000 Prepaid expenses 3,000 1,200 Total current assets $12, ,000 $23, ,700 $(11,500) Property and equipment: Land 40,000 40,000 Buildings and equipment, ($11,500 net 120,000 $23,500) 85, % 48.9% Total property and equipment 160, ,000 Total assets $ 315,000 $ 289,700 We could do this for the liabilities & stockholders equity, but instead, let s look at the income statement. Increase (Decrease) Amount % Net sales $ 520,000 $ 480,000 $ 40, Cost of goods sold 360, ,000 45, Gross margin Sales increased 160,000 by 8.3%, 165,000 yet (5,000) (3.0) Operating net expenses income decreased 128,600 by 126, %. 2, Net operating income 31,400 39,000 (7,600) (19.5) Interest expense 6,400 7,000 (600) (8.6) Net income before taxes 25,000 32,000 (7,000) (21.9) Less income taxes (30%) 7,500 9,600 (2,100) (21.9) Net income $ 17,500 $ 22,400 $ (4,900) (21.9)
3 14-3 There were increases in both cost of goods sold (14.3%) and operating expenses (2.1%). These increased costs more than offset the Increase increase in sales, yielding an overall (Decrease) decrease in net 2008 income Amount % Net sales $ 520,000 $ 480,000 $ 40, Cost of goods sold 360, ,000 45, Gross margin 160, ,000 (5,000) (3.0) Operating expenses 128, ,000 2, Net operating income 31,400 39,000 (7,600) (19.5) Interest expense 6,400 7,000 (600) (8.6) Net income before taxes 25,000 32,000 (7,000) (21.9) Less income taxes (30%) 7,500 9,600 (2,100) (21.9) Net income $ 17,500 $ 22,400 $ (4,900) (21.9) Trend percentages state several years financial data in terms of a base year, which equals 100 percent. Trend Current Year Amount 100% Percentage Base Year Amount Berry Products Income Information Year Item Sales $ 400,000 $ 355,000 $ 320,000 $ 290,000 $ 275,000 Cost of goods sold 285, , , , ,000 Gross margin 115, ,000 95,000 92,000 85,000 The base year is 2003, and its amounts will equal 100%. Berry Products Income Information Year Item Sales 105% 100% Cost of goods sold 104% 100% Gross margin 108% 100% 2004 Amount 2003 Amount 100% ( $290,000 $275,000 ) 100% 105% ( $198,000 $190,000 ) 100% 104% ( $ 92,000 $ 85,000 ) 100% 108% Berry Products Income Information Year Item Sales 145% 129% 116% 105% 100% Cost of goods sold 150% 132% 118% 104% 100% Gross margin 135% 124% 112% 108% 100% By analyzing the trends for Berry Products, we can see that cost of goods sold is increasing faster than sales, which is slowing the increase in gross margin.
4 14-4 Percentage We can use the trend percentages to construct a graph so we can see the trend over time Year Sales COGS GM Common-size statements use percentages to express the relationship of individual components to a total within a single period. This is also known as vertical analysis. Gross Margin Percentage Gross Margin Percentage Gross Margin Sales This measure indicates how much of each sales dollar is left after deducting the cost of goods sold to cover expenses and provide a profit. In balance sheets, all items are expressed as a percentage of total assets. Wendy's McDonald's (dollars in millions) Dollars Percentage Dollars Percentage 2002 Net income $ % $ % Common-size financial statements are particularly useful when comparing data from different companies. Common-Size Percentages Net sales $ 520,000 $ 480, Cost of goods sold 360, ,000 Gross margin 160, ,000 Operating expenses 128, ,000 Net operating income 31,400 39,000 Interest expense 6,400 7,000 Net income before taxes 25,000 32,000 Less income taxes (30%) 7,500 9,600 Net income $ 17,500 $ 22,400 Net sales is the base and is expressed as 100%.
5 14-5 Common-Size Percentages Net sales $ 520,000 $ 480, Cost of goods sold 360, , Gross margin 160, ,000 Operating expenses 128, ,000 Net operating 2008 Cost income 2008 Sales 31, % 39,000 Interest ( $360,000 expense $520,000 6,400 ) 100% 7, % Net income before taxes 25,000 32,000 Less income 2007 taxes (30%) Cost ,500Sales 9, % Net income ( $315,000 $ 17,500 $480,000 $ 22,400 ) 100% 65.6% What conclusions can we draw? Common-Size Percentages Net sales $ 520,000 $ 480, Cost of goods sold 360, , Gross margin 160, , Operating expenses 128, , Net operating income 31,400 39, Interest expense 6,400 7, Net income before taxes 25,000 32, Less income taxes (30%) 7,500 9, Net income $ 17,500 $ 22, s Earnings Per Share Common Stockholders Earnings per Share Net Income Preferred Dividends Average Number of Common Shares Outstanding Short-term Creditors Whenever a ratio divides an income statement balance by a balance sheet balance, the average for the year is used in the denominator. Long-term Creditors Earnings Per Share Price-Earnings Earnings per Share Earnings per Share Net Income Preferred Dividends Average Number of Common Shares Outstanding $53,690 0 $2.42 (17, ,400)/2 Price-Earnings Price-Earnings Market Price Per Share Earnings Per Share $ times $2.42 This measure indicates how much income was earned for each share of common stock outstanding. This measure is often used by investors as a general guideline in gauging stock values. Generally, the higher the priceearnings ratio, the more opportunity a company has for growth.
6 14-6 Dividend Payout Dividend Yield Dividend Payout Dividends Per Share Earnings Per Share Dividend Yield Dividends Per Share Market Price Per Share Dividend Payout $ % $2.42 Dividend Yield $ % $20.00 This ratio gauges the portion of current earnings being paid out in dividends. Investors seeking current income would like this ratio to be large. This ratio identifies the return, in terms of cash dividends, on the current market price of the stock. Return on Total Assets Return on Common Stockholders Equity Return on Total Assets Net Income + [Interest Expense (1 Tax Rate)] Average Total Assets Return on Common Stockholders Equity Net Income Preferred Dividends Average Stockholders Equity Return on Total Assets $53,690 +[7,300 (1.30)] 18.19% ($300,000 + $346,390) 2 Return on Common $53, % Stockholders Equity ($180,000 + $234,390) 2 This ratio measures how well assets have been employed. This measure indicates how well the company employed the owners investments to earn income. Financial Leverage Book Value Per Share Financial leverage involves acquiring assets with funds at a fixed rate of interest. Book Value per Share Common Stockholders Equity Number of Common Shares Outstanding Return on investment in assets Return on investment in assets > < Fixed rate of return on borrowed funds Fixed rate of return on borrowed funds Positive financial leverage Negative financial leverage This ratio measures the amount that would be distributed to holders of each share of common stock if all assets were sold at their balance sheet carrying amounts and if all creditors were paid off. Book Value per Share $234,390 27,400 $ 8.55
7 14-7 Book Value Per Share Working Capital Book Value per Share Common Stockholders Equity Number of Common Shares Outstanding The excess of current assets over current liabilities is known as working capital. Book Value per Share $234,390 27,400 $ 8.55 Notice that the book value per share of $8.55 does not equal the market value per share of $20. This is because the market price reflects expectations about future earnings and dividends, whereas the book value per share is based on historical cost. Working capital is not free. It must be financed with long-term debt and equity. Working Capital Current Norton Corporation December 31, 2007 Current assets $ 65,000 Current liabilities (42,000) Working capital $ 23,000 Current Current Assets Current Liabilities The current ratio measures a company s short-term debt paying ability. A declining ratio may be a sign of deteriorating financial condition, or it might result from eliminating obsolete inventories. Current Acid-Test (Quick) Current Current Assets Current Liabilities Acid-Test Quick Assets Current Liabilities Current $65, $42,000 The current ratio measures a company s short-term debt paying ability. Quick assets include Cash, Marketable Securities, Accounts Receivable and current Notes Receivable. The quick ratio measures a company s ability to meet obligations without having to liquidate inventory. Acid-Test $50,000 $42, Norton Corporation s quick assets consist of cash of $30,000 and accounts receivable of $20,000.
8 14-8 Accounts Receivable Average Collection Period Accounts Receivable Sales on Account Average Accounts Receivable Average Collection Period 365 Days Accounts Receivable Accounts Receivable $500,000 ($17,000 + $20,000) times Average Collection Period 365 Days Times days This ratio measures how many times a company converts its receivables into cash each year. This ratio measures, on average, how many days it takes to collect an account receivable. Inventory Inventory Inventory Cost of Goods Sold Average Inventory Inventory Cost of Goods Sold Average Inventory This ratio measures how many times a company s inventory has been sold and replaced during the year. Inventory $140,000 ($10,000 + $12,000) times If a company s inventory turnover Is less than its industry average, it either has excessive inventory or the wrong sorts of inventory. This ratio measures how many times a company s inventory has been sold and replaced during the year. Average Sale Period Times Interest Earned Average Sale Period 365 Days Inventory Times Interest Earned Earnings before Interest Expense plus Income Taxes Interest Expense Average Sale Period 365 Days Times This ratio measures how many days, on average, it takes to sell the inventory days Times Interest Earned $84, times 7,300 The times interest earned ratio is the most common measure of a company s ability to protect its long-term creditors.
9 14-9 Debt-to-Equity Debt to Equity This ratio indicates the relative proportions of debt to equity on a company s balance sheet. Stockholders like a lot of debt if the company can take advantage of positive financial leverage. Total Liabilities Stockholders Equity Creditors prefer less debt and more equity because equity represents a buffer of protection. In practice, debt-to-equity ratios from 0.0 to 3.0 are common. Debt-to-Equity Debt to Equity Debt to Equity Total Liabilities Stockholders Equity $112, $234,390 This ratio indicates the relative proportions of debt to equity on a company s balance sheet. Review Tutorial n Financial Statement Analysis n Dollar and Percentage Changes n n Common Sized Statements n Vertical Analysis n Analysis n Review of today s lecture n Complete Review Problems n 14-3 n 14-6
How Well Am I Doing? Financial Statement Analysis
How Well Am I Doing? Financial Statement Analysis Chapter 16 McGraw-Hill/Irwin Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved. Limitations of Financial Statement Analysis Differences
More informationFAQ: Financial Ratio Analysis
Question 1: What is horizontal analysis of financial statement data? Answer 1: Horizontal analysis is a method of financial ratio analysis. Horizontal analysis is comparing each item on the financial statements
More informationa $33.17 $33.33 $33.50 $28.57
What is the book value per share for a company that has total stockholders' equity of $10,000,000, preferred stock of $50,000, and 300,000 common shares outstanding? a $33.17 $33.33 $33.50 $28.57 "'Your
More informationCA. Sonali Jagath Prasad ACA, ACMA, CGMA, B. Com.
MANAGEMENT OF FINANCIAL RESOURCES AND PERFORMANCE SESSIONS 5 & 6 FINANCIAL DATA, PERFORMANCE ANALYSIS & MANAGEMENT AND DECISION MAKING June 10 to 24, 2013 CA. Sonali Jagath Prasad ACA, ACMA, CGMA, B. Com.
More informationWEEK 10 Analysis of Financial Statements
WEEK 10 Analysis of Financial Statements Learning Objectives 1. Organize a systematic financial statements analysis using common-size financial statements and ratio analysis. 2. Recognize the potential
More informationFinancial Analysis. Instructor: Michael Booth Cabrillo College
Financial Analysis Instructor: Michael Booth Cabrillo College Factors in Communicating Useful Information The primary objective of accounting is to provide information useful for decision making. To provide
More informationAnalysis and Interpretation of Financial Statements
Chapter 23 Analysis and Interpretation of Financial Statements o Prepare comparative financial statements using horizontal analysis o Prepare comparative financial statements using vertical analysis o
More informationWeek 4 and Week 5 Handout Financial Statement Analysis
Week 4 and Week 5 Handout Financial Statement Analysis Introduction After understanding the basic financial statements, one may be interested in analysing the financial statements to understand the performance
More informationAGENDA: MANAGEMENT ACCOUNTING
14-1 Management Accounting Tutorial 8 (, chapter 13, 14, 1, 2, 3) Mid Module Review Bangor University Transfer Abroad Programme 1. Globalization. 2. Strategy. 3. Organizational structure. 4. Process management.
More informationProfessional Designation Ratios: Formulas & Definitions Used in Credit Risk Assessment
Professional Designation Ratios: Formulas & Definitions Used in Credit Risk Assessment Profitability Ratios Measure management's ability to control expenses and to earn a return on the resources committed
More informationA Manager's Guide to Financial Analysis
A Manager's Guide to Financial Analysis A Manager's Guide to Financial Analysis Fifth Edition Steven D. Grossman Contents About This Course How to Take This Course Introduction ix xi xiii 1 Financial
More informationUnderstanding Financial Statements. Elizabeth Rankin
Understanding Financial Statements Elizabeth Rankin Overview Accounting Concepts Principles Financial Statements Evaluating Performance Horizontal Analysis Vertical Analysis Ratio Analysis Entity Concept
More informationLESSON Trend Analysis and Component Percentages. CENTURY 21 ACCOUNTING 2009 South-Western, Cengage Learning
Trend Analysis and Component Percentages Trend Analysis and Component Percentage 2 Financial statements report the financial condition and progress of a business for a fiscal period. Accounting concepts
More informationChapter 3 Working with Financial Statements
Chapter 3 Working with Financial Statements This chapter is a continuation of Chapter 2. We use accounting numbers because of the unavailability of market numbers. We prefer to use market numbers. Common-Size
More informationRatio Analysis. Assets = Liabilities + Shareholder s Equity
Ratio Analysis The purpose of a financial statement is to disclose information about the financial position of an entity to interested parties. By reporting the finances, shareholders are able to make
More informationA/P Turnover (Activity)
A/P Turnover (Activity) 1a COGS Avg A/P 1b A/R Turnover (Activity) 2a Net Credit Sales Avg Net Receivables [A/R quality & success in collecting outstanding A/R] 2b A/R Turnover in Days (Activity) 3a Avg
More informationExcellence in. Management
Excellence in Financial Management Course 1: Evaluating Financial Performance Prepared by: Matt H. Evans, CPA, CMA, CFM Chapter 1: Return on Equity Why use ratios? It has been said that you must measure
More informationBasic Elements of Balance Sheet Assets Liabilities
FINANCIAL ANALYSIS COURSE OUT LINE Course Objectives: This course is an advance subject which uses the out put of accounting records/data. The outline of this course is basthink about the firm.ed on the
More informationChapter 19. Financial Statement Analysis. Learning Objectives. The Annual Report Usually Contains...
PowerPoint to accompany Chapter 19 Financial Statement Analysis Learning Objectives 1. Perform a horizontal analysis of comparative financial statements 2. Perform a vertical analysis of financial statements
More information2/2/2009. Financial statement EARNING POWER AND IRREGULAR ITEMS. EARNING POWER AND IRREGULAR ITEMS continued. Chapter 14
Chapter 14 Financial statement analysis PowerPoint presentation by Anne Abraham University of Wollongong 2009 John Wiley & Sons Australia, Ltd EARNING POWER AND IRREGULAR ITEMS Earning power refers to
More informationCHAPTER 20. Analysis and interpretation of financial statements CONTENTS
CHAPTER 20 Analysis and interpretation of financial statements CONTENTS 20.1 Horizontal and vertical analysis 20.2 Trend analysis 20.3 Effect of transactions on ratios 20.4 Ratio analysis 20.5 Ratio analysis
More information07/10/2013. Chapter 18. Financial statement analysis part a, Session 11
Chapter 18 Financial statement analysis part a, Session 11 PowerPoint to accompany: Learning objectives Perform a horizontal analysis of financial statements Perform a vertical analysis of financial statements
More informationANALYSIS OF FINANCIAL STATEMENTS
ANALYSIS OF FINANCIAL STATEMENTS 1. Basic concept of financial statement analysis 2. Liquidity ratios 3. Asset management ratios 4. Debt management ratios 5. Profitability ratios 6. Market value ratios
More informationWorking with Financial Statements
Working with Financial Statements Lakehead University September 2005 Overview of the Lecture 3.2 Standardizes Financial Statements 3.3 Ratio Analysis 3.4 Dupont Identity 3.5 Using Financial Statement Information
More informationWorking with Financial Statements
Working with Financial Statements Lakehead University September 2005 Overview of the Lecture 3.2 Standardizes Financial Statements 3.3 Ratio Analysis 3.4 Dupont Identity 3.5 Using Financial Statement Information
More informationFin-621 Final term Solved Papers by Fahad Yusha Cell: and
FINALTERM EXAMINATION Spring 2010 FIN621- Financial Statement Analysis (Session - 1) : 90 min Marks: 69 Question No: 1 ( Marks: 1 ) - Please choose one Which one of the following is NOT a type of adjusting
More informationPerformance Indicators for 6 years
Performance Indicators for 6 years FINANCIAL POSITION Balance sheet (Rupees in Thousand) Other noncurrent assets Total assets 2,084,856 6,544 2,436,65 2,040,33 11,386 2,257,568 4,417,23 1,803,2 101,268
More informationFinancial Statements, Forecasts, and Planning Chapter 6
C H A P T E R 6 Financial Statements, Forecasts, and Planning Chapter 6 Chapter Objectives Identify the elements of the balance sheet. Identify the elements of the income statement. Discuss the cash flow
More informationAccounting Building Business Skills. Learning Objectives: Learning Objectives: Paul D. Kimmel. Chapter Eleven: Financial Statement Analysis
Accounting Building Business Skills Paul D. Kimmel Chapter Eleven: Financial Statement Analysis PowerPoint presentation by Kate Wynn-Williams University of Otago, Dunedin 2003 John Wiley & Sons Australia,
More informationBrandon's Auto Supply Company
Balance Sheet at June 30, 20XX Brandon's Auto Supply Company Vertical Analysis 20X9 % 20X8 % 20X7 % Current Assets Cash $ 88,531 7.5% $ 104,287 9.5% $ 117,910 11.7% Accounts receivable $ 117,793 10.0%
More informationAnalysis and interpretation of financial statements
Chapter 19 Analysis and interpretation of financial statements PowerPoint presentation by Anne Abraham University of Wollongong 2009 John Wiley & Sons Australia, Ltd SOURCES OF FINANCIAL INFORMATION Financial
More informationModule 4. Analyzing and Interpreting Financial Statements
Module 4 Analyzing and Interpreting Financial Statements Analysis Structure Return on Equity Return on equity (ROE) is computed as: Operating Return (RNOA) The income statement reflects operating activities
More informationWeek 14, Chap14 Accounting 1A, Financial Accounting
Week 14, Chap14 Accounting 1A, Financial Accounting Analyzing Financial Statements Instructor: Michael Booth Understanding The Business Return on an equity security investment Dividends Increase in share
More informationANSWER SHEET EXAMINATION #2
ANSWER SHEET EXAMINATION #2 1) D 2) B 26) D 3) C 27) B 4) A 28) B 5) D 29) C 6) D 30) A 7) D 31) B 8) C 32) D 9) D 33) D 10) B 34) D 11) A 12) A 13) D 14) C 15) A 16) C 17) B 18) B 19) C 20) B 21) B 22)
More informationProblems - Ch. 6 Adjusting Zenab to FIFO:
10.{L}A. Problems - Ch. 6 Adjusting to FIFO: Since the LIFO reserve increased by $1,500, the LIFO effect is $1,500. Under FIFO, COGS is $1,500 lower at $59,800 ($61,300 - $1,500). is $1,500 higher at $6,500.
More informationAccounting Functions. The various financial statements are- Income Statement Balance Sheet
Accounting Functions The accounting system provides a structure of maintaining details of business transactions that represent the finances of the organization. The various financial statements are- Income
More informationWorking with Financial Statements
Working with Financial Statements Lakehead University September 2004 Overview of the Lecture 3.1 Cash Flow and Financial Statements 3.2 Standardizes Financial Statements 3.3 Ratio Analysis 3.4 Dupont Identity
More informationWorking with Financial Statements
Working with Financial Statements Lakehead University September 2004 Overview of the Lecture 3.1 Cash Flow and Financial Statements 3.2 Standardizes Financial Statements 3.3 Ratio Analysis 3.4 Dupont Identity
More informationSTUDY UNIT TWO FINANCIAL PERFORMANCE METRICS FINANCIAL RATIOS
STUDY UNIT TWO FINANCIAL PERFORMANCE METRICS FINANCIAL RATIOS 1 2.1 Liquidity Ratios.......................................................... 2 2.2 Leverage and Solvency Ratios..............................................
More informationFin-621 Final term Solved Papers by Fahad Yusha Cell: and
FINALTERM EXAMINATION Spring 2010 FIN621 - Financial Statement Analysis Student Info StudentID: Time: 90 min Marks: 69 Center: ExamDate: Tue, Aug 10, 2010 Question No: 1 After recording the transactions
More informationIntroduction to Finance, Part 2: Cash Flow Statement & Financial Statement Analysis
1 Introduction to Finance, Part 2: Cash Flow Statement & Financial Statement Analysis CHRIS GASTON AND JENNIFER DEBOER Review & Roadmap Balance Sheet: a summary of a company s financial position at a specific
More informationFinancial Ratio Analysis
2012 Financial Ratio Analysis Martin Zander 2 M. Zander Financial Ratio Analysis This book has been purchased online on: XinXii.com ebooks & documents from indie authors http://www.xinxii.com 3 Copyright,
More informationRATIO ANALYSIS. The preceding chapters concentrated on developing a general but solid understanding
C H A P T E R 4 RATIO ANALYSIS I N T R O D U C T I O N The preceding chapters concentrated on developing a general but solid understanding of accounting principles and concepts and their applications to
More informationRole of Financial Manager. Assessing Financial Performance. Analysis of Financial Statements. To create value, the financial manager should:
Role of Financial Manager To create value, the financial manager should: 1. Make sound investment decisions. 2. Make sound financing decisions. Importance of Assessing Financial Performance Assessing Financial
More informationCMA Part 2 Financial Decision Making
CMA Part 2 Financial Decision Making Introduction to Essays on the CMA exam Study Unit 2 - Ratio Analysis Study Unit 3 Profitability Analysis and Analytical Issues (3.1 - Profitability Ratios only) Study
More informationFinancial & Managerial Accounting Practice with Ratios and Analysis
Financial & Managerial Accounting Practice with Ratios and Analysis A company had the following income statement for the year and the balance sheet accounts at the end of the year. Use the information
More informationACCOUNTING FOR NON- ACCOUNTANTS UNDERSTANDING THE BASICS OF ACCOUNTING
ACCOUNTING FOR NON- ACCOUNTANTS UNDERSTANDING THE BASICS OF ACCOUNTING LEARNING OBJECTIVE To guide and assist you in your decision making processes, To allow you to participate actively in the financial
More informationNot For Sale CHECK FIGURES. Chapter 1. Chapter 3. Chapter 2
CHECK FIGURES 796 Check figures are given for selected problems here. For the complete Check Figures for all applicable Cornerstone Exercises, Exercises, Problems, and Cases, please visit the companion
More informationKey Business Ratios v 2.0 Course Transcript Presented by: TeachUcomp, Inc.
Key Business Ratios v 2.0 Course Transcript Presented by: TeachUcomp, Inc. Course Introduction Welcome to Key Business Ratios, a presentation of TeachUcomp, Inc. This course examines key ratios used to
More informationC521 CHAPTER 13 & REVIEW FOR MIDTERM FINANCIAL ACCOUNTING EXAM
1 C521 CHAPTER 13 & REVIEW FOR MIDTERM FINANCIAL ACCOUNTING EXAM What have we done in the course? On a chapter by chapter basis, we primarily have examined specific transactions and the effect on financial
More informationFINANCIAL RATIOS. LIQUIDITY RATIOS (and Working Capital) You want current and quick ratios to be > 1. Current Liabilities SAMPLE BALANCE SHEET ASSETS
FINANCIAL RATIOS ROUND ALL ANSWERS TO TWO DECIMALS UNLESS REQUESTED OTHERWISE IN THE PROBLEM LIQUIDITY RATIOS (and Working Capital) You want current and quick ratios to be > 1 Current Ratio Quick Ratio
More informationAnalysis and Use of Financial Statements
Analysis and Use of Financial Statements Copyright 2014 by DELTACPE LLC All rights reserved. No part of this course may be reproduced in any form or by any means, without permission in writing from the
More informationAll amounts in 000's of Canadian dollars, except common shares issued (a) (1) (a) (2)
Shoppers Suggested Solution (a) (1) and (2) Shoppers Drug Mart All amounts in 000's of Canadian dollars, except common shares issued (a) (1) (a) (2) Horizontal Analysis Vertical Analysis Comparison 2007-2008
More informationFinancial Statement Analysis
EXECUTIVE SUMMARY While it is sometimes difficult to convince the customer to share their financial information, it must be understood that the financial statement is probably the most important tool available
More informationFinancial Statement Analysis
Financial Statement Analysis Lakehead University September 2003 Overview of the Lecture 2.1 Financial Statements 2.2 Ratio Analysis 2.4 Common-Size Analysis 2.3 Changing Prices 2.5 International Considerations
More informationAccounting)Exam)Notes!
Accounting)Exam)Notes! Week 1 The role of accounting in business Adjusting processes can be created Accounting period - a measurement period. 12 months. Listed companies can be 6 months - even quarterly.
More information*Define and differentiate the accrual method and cash method of recording transactions.
Accounting 1 *Define and differentiate the terms accounting, auditing, and bookkeeping: --Accounting the process of recording, reporting and analyzing financial transactions. --Bookkeeping the process
More informationCHAPTER 18. Financial Statement Analysis. Brief Exercises Exercises 4, 5, 6, 7 3, 4, 5 2, 3, , 9, 10, 11, 12, 13, 14, 15, 16
CHAPTER 18 Financial Statement Analysis ASSIGNMENT CLASSIFICATION TABLE Study Objectives 1. Explain and apply horizontal analysis. Questions 1, 2, 3, 4, 5 Brief Exercises Exercises Problems Set A Problems
More information1 2. Financial ratios
1 2. Financial ratios Warning 2 Remember that accounting statements are based on book values. We would prefer to make decisions based on market values, but such information may not be easy to obtain, and
More informationCFIN4 Chapter 2 Analysis of Financial Statements
1. The income statement measures the flow of funds into (i.e. revenue) and out of (i.e. expenses) the firm over a certain time period. It is always based on accounting data. Income statement 2. The balance
More informationKey Operational and Financial Data
Key Operational and Financial Data Operations Summary Tons Production 217,370 209,524 195,906 134,272 127,384 70,916 Sales 217,043 214,316 181,259 138,923 126,129 64,912 Summary of Statement of Profit
More informationAccountingCoach.com Financial Ratios
AccountingCoach.com Financial Ratios All underlined words are defined in the attached Glossary (Pages 13 20). Introduction to Financial Ratios When analyzing computing financial ratios and when doing other
More informationAccounting. Overview 1/8/2019. Intro to Business and Technology
Accounting Intro to Business and Technology Overview Required Assignments Introduction Essential Questions Assignment Key Terms Think About This Assignment Discussion 5 Language of Business Financial Statements
More informationChapter Fourteen Lecture Notes Financial Statement Analysis
Chapter Fourteen Lecture Notes Financial Statement Analysis 1 Financial Analysis Financial analysis uses the financial statements and other sources of information to: - help managers and outsiders understand
More informationCHAPTER 2 ANALYSIS OF FINANCIAL STATEMENTS
TRUE/FALSE CHAPTER 2 ANALYSIS OF FINANCIAL STATEMENTS 1. The income statement measures the flow of funds into (i.e. revenue) and out of (i.e. expenses) the firm over a certain time period. It is always
More informationManagerial Accounting Prof. Dr. Varadraj Bapat Department of School of Management Indian Institute of Technology, Bombay. Lecture - 14 Ratio Analysis
Managerial Accounting Prof. Dr. Varadraj Bapat Department of School of Management Indian Institute of Technology, Bombay Lecture - 14 Ratio Analysis Dear students, in our last session we are started the
More informationPELLISSIPPI STATE TECHNICAL COMMUNITY COLLEGE MASTER SYLLABUS PRINCIPLES OF ACCOUNTING I ACC 2110
PELLISSIPPI STATE TECHNICAL COMMUNITY COLLEGE MASTER SYLLABUS PRINCIPLES OF ACCOUNTING I ACC 2110 Class Hours: 3.0 Credit Hours: 3.0 Laboratory Hours: 0.0 Date Revised: Fall 1999 Catalog Course Description:
More informationChapter # 6. Analysis of Financial Statement. Sameer Hussain.
Analysis of Financial Statement SYLLABUS ACCORDING TO UNIVERSITY OF KARACHI: Financial Statement analysis. Tools of analysis. Dollar/Rupees and percentage change. Trend percentage. Component percentage.
More informationCMA 2010 Support Package
CMA 2010 Support Package Ratio Definitions CMA EXAM RATIO DEFINITIONS Abbreviations EBIT = Earnings before interest and taxes EBITDA = Earnings before interest, taxes, depreciation and amortization EBT
More informationWikipedia: "Financial Ratio" Contents. Sources of Data for Financial Ratios. Purpose and Types of Ratios
Wikipedia: "Financial Ratio" A financial ratio or accounting ratio is a relative magnitude of two selected numerical values taken from an enterprise's financial statements. Often used in accounting, there
More informationChapter 3 Analysis of Financial Statements. Ratio Analysis Please refer to the attached financial statements, and industry average ratios
Chapter 3 Analysis of Financial Statements Ratio Analysis Please refer to the attached financial statements, and industry average ratios In this chapter, we will cover Liquidity ratios Asset management
More informationFinancial Statement Analysis
Financial Statement Analysis K R Subramanyam John J Wild McGraw-Hill/Irwin Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved. 10-2 Credit Analysis 10 CHAPTER 10-3 Liquidity and Working
More informationAccounting as a Source of Financial Information. Atanas Atanasov, Assist.prof., University of Economics - Varna
Accounting as a Source of Financial Information Atanas Atanasov, Assist.prof., University of Economics - Varna Fundamental concepts What is accounting? The language of business. A means to communicate
More informationAN INTRODUCTION TO ANALYSIS OF FINANCIAL STATEMENT
COURSE 6 Block 1 UNIT-1 AN INTRODUCTION TO ANALYSIS OF FINANCIAL STATEMENT Learning Objectives After reading this chapter, students should be able to: Meaning, definitions and features of financial statement
More informationNEW YORK UNIVERSITY Stern School of Business B Financial Accounting and Reporting Saturday, 9:00 a.m. 4:00 p.m.
NEW YORK UNIVERSITY Stern School of Business B01.1306.00 Financial Accounting and Reporting Saturday, 9:00 a.m. 4:00 p.m. (KMC - xxx) Professor: David M. Perkal E-mail: dperkal@stern.nyu.edu Office: KMC
More informationChapter 02 Analysis of Financial Statements
Chapter 02 Analysis of Financial Statements TRUEFALSE 1. The information contained in the annual report is used by investors to form expectations about future earnings and dividends. 2. Noncash assets
More informationAnalysis of the Financial Reports
Analysis of the Financial Reports Reference Framework for Financial Analysis Analysis of the company s funding needs Analysis of the company s profitability and financial position Analysis of the company
More informationChapter 15 Accounting & Financial Analysis
Chapter 15 Accounting & Financial Analysis Professor Muriel Anderson, CPA MGG 150: Introduction to Business November 12, 2013 Chapter Outline How Firms Use Accounting Responsible Financial Reporting Interpreting
More informationNEW YORK UNIVERSITY Stern School of Business C Principles of Financial Accounting Mon. & Wed., 11:00 a.m. 12:15 p.m.
NEW YORK UNIVERSITY Stern School of Business C10.0001.02 Principles of Financial Accounting Mon. & Wed., 11:00 a.m. 12:15 p.m. (KMC 3-90) Professor: David M. Perkal E-mail: dperkal@stern.nyu.edu Office:
More informationACCOUNTING RATIOS ACTIVITY / TURNOVER RATIOS BY- ANUJ JINDAL
ACCOUNTING RATIOS ACTIVITY / TURNOVER RATIOS BY- ANUJ JINDAL ACTIVITY/ TURNOVER/ EFFICIENCY RATIOS Rapidity with which the resources available to the concern are being used to produce revenue from operations
More informationCompany Information. December 27 December 28 December Company Name. Panera Bread Company. Fiscal Year End Dates
Company Information Company Name Fiscal Year End Dates Balance Sheet Units (i.e. 000's) Income Statement Units (i.e. 000's) Most Recent Year for Data Date of Analysis 2011 Calendar Year Industry Comparisons
More informationFinancial Statement Analysis. Cash Flow Statement
Financial Statement Analysis Cash Flow Statement 1 The Articulation of the Financial Statements Beginning stocks Flows Ending stocks Cash Flow Statement Beginning Balance Sheet Cash Cash from operations
More informationFinancial Statement Analysis
14-1 Chapter 14 Financial Statement Analysis 14-2 Learning Objectives After studying this chapter, you should be able to: 1. Discuss the need for comparative analysis. 2. Identify the tools of financial
More informationEXAM #2 SAMPLE PROBLEMS
EXAM #2 SAMPLE PROBLEMS (Lessons 5-10) Use the following information to respond to problems 1-6 assuming Zee Corp. maintains their inventory records on a perpetual basis: 1/12 Zee Corp., a wholesaler of
More informationNEW YORK UNIVERSITY Stern School of Business B Financial Accounting and Reporting Saturday, 9:00 a.m. 12:00 p.m.
NEW YORK UNIVERSITY Stern School of Business B01.1306.00 Financial Accounting and Reporting Saturday, 9:00 a.m. 12:00 p.m. (KMC xxx) Professor: David M. Perkal E-mail: dperkal@stern.nyu.edu Office: KMC
More informationBAT 4M1 CPT Chapter 17 Notes
BAT 4M1 CPT Chapter 17 Notes Basics of Financial Statement Analysis Financial statement analysis involves evaluating a company s liquidity, solvency, and profitability Objective: to give capital providers
More informationFinancial Management Masters of Business Administration Study Notes & Tutorial Questions Chapter 7: Analysis & Interpretation of Financial Statement
Financial Management Masters of Business Administration Study Notes & Tutorial Questions Chapter 7: Analysis & Interpretation of Financial 1 INTRODUCTION Financial statement is a data summary on asset,
More informationBusiness Finance Bachelors of Business Study Notes & Tutorial Questions Chapter 5: Financial Analysis
Business Finance Bachelors of Business Study Notes & Tutorial Questions Chapter 5: Financial Analysis 1 INTRODUCTION Chapter 5: Financial Analysis 2018 Financial statement is a data summary on asset, liability
More informationFinancial & Business Highlights For the Year Ended June 30, 2017
Financial & Business Highlights For the Year Ended June, 17 17 16 15 14 13 12 Profit and Loss Account Operating Revenue 858 590 648 415 172 174 Investment gains net 5 162 909 825 322 516 Other 262 146
More informationQuestion No: 1 ( Marks: 1 ) - Please choose one Which of the following principle deals with the valuation and recording of the assets at cost?
Question No: 1 ( Marks: 1 ) - Please choose one Which of the following principle deals with the valuation and recording of the assets at cost? Entity Principle Matching Principle Cost Principle p--3 Stable
More informationGateway NACM Credit Conference Presented by: Curtis Litchfield, CCE September 19, 2018
Welcome Gateway NACM Credit Conference Presented by: Curtis Litchfield, CCE September 19, 2018 Financial Statement Analysis Tools and Techniques Common-Size Financial Statements Key Financial Ratios Trend
More informationCBF Exam Review. Financial Statements Part 1. Tom Shimko, CCE
CBF Exam Review Financial Statements Part 1 Tom Shimko, CCE 1 CBF Exam 1. Tests consists of 140 questions - 101 multiple choice questions - 39 true/false questions 2. Subject matter covered - Business
More informationLevel 2: Study Session 09: Equity Investments: Industry and Company Analysis 160 questions.
Level 2: Study Session 09: Equity Investments: Industry and Company Analysis 160 questions. Introduction by the Author : Hi there, CFA fellows, here you are. You see, it doesn't need to be an expensive
More informationRatio Analysis. CA Past Years Exam Question
Ratio Analysis CA Past Years Exam Question Question : 1 Nov, 2009 From the Following Information, Calculate the Amount of Fixed Assets & Proprietors Funds. 1. Ratio of Fixed Assets to Proprietors Funds
More informationBusiness Ratios. Current Ratio
Current Ratio Business Ratios Measures whether or not the firm has enough resources to pay its debt over the next 12 months formula: Current Ratio = Current Assets Current Liabilities Acceptable ratios
More informationFINANCIAL PERFORMANCE ANALYSIS OF BEXIMCO PHARMACEUTICALS LTD. AND SQUARE PHARMACEUTICALS LTD. Submitted to. M. Nurul Amin.
FINANCIAL PERFORMANCE ANALYSIS OF BEXIMCO PHARMACEUTICALS LTD. AND SQUARE PHARMACEUTICALS LTD. Submitted to M. Nurul Amin Submitted by Date-31 st July, 2010 North South University Financial Performance
More informationLearning Objective. LO1 Analyze an income statement using vertical analysis Cengage Learning. All Rights Reserved.
Learning Objective LO1 Analyze an income statement using vertical analysis. Lesson 17-1 Vertical Analysis Ratios LO1 Vertical analysis ratios measure the relationship between one financial statement item
More informationCFA-Level-I. Financial. Chartered Financial Analyst Level I (CFA Level I)
Financial CFA-Level-I Chartered Financial Analyst Level I (CFA Level I) Download Full Version : http://killexams.com/pass4sure/exam-detail/cfa-level-i QUESTION: 566 For which of the following ways of manipulating
More informationFINANCIAL RATIOS 2 Page 1 of 5. The following is information concerning ABC Company and XYZ Company.
FINANCIAL RATIOS 2 Page 1 of 5 The following is information concerning ABC Company and XYZ Company. ABC Company XYZ Company CURRENT ASSETS: Cash 22,600 42,800 Accounts and Notes Receivable 92,500 101,100
More informationFINANCIAL RATIOS 3 Page 1 of 5. The following is information concerning ABC Company and XYZ Company.
FINANCIAL RATIOS 3 Page 1 of 5 The following is information concerning ABC Company and XYZ Company. ABC Company XYZ Company CURRENT ASSETS: Cash 18,700 33,000 Accounts and Notes Receivable 43,000 59,800
More information