Lecture 4. Interpreting and using financial statements for valuation II. Financial ratio analysis
|
|
- Brooke Harrington
- 5 years ago
- Views:
Transcription
1 Lecture 4 Interpreting and using financial statements for valuation II Financial ratio analysis
2 Agenda Use of financial ratios ROE decomposition Growth, risk, and, cash flow 2
3 What are financial ratios used for? To analyze a company s financial position and development profitability operating efficiency financial strategy dividend policy To compare company ratios with competitors and industry To calculate inputs and sanity checks for valuation formulas 3
4 Strategy and financial policy drive profitability and growth Recall lecture 2: a firm with sustainable competitive strategy will have a product market strategy leading to high revenues, low costs, and/or low invested capital Financial policy can also be for higher growth and profitability: higher leverage can be used to enhance profitability with a risk no dividends leads to higher growth 4
5 Basic return on equity concepts Accounting (book value) based returns Return on Equity (ROE) = Net Profit Shareholders' Equity Market based return Holding period return (t) = (Price(t) - Price(t-1)) + Dividends(t) Price(t-1) Required rate of return = (equilibrium, e.g. CAPM) price of equity 5
6 Return on equity (ROE) is the accounting counterparty to market return on equity Measurement ROE is return for all equity (common, preferred, minority) Equity should be measured as average total equity during fiscal year, but analysts often use ending balance, Palepu et al. use beginning balance in Chapter 5 Using ROE to measure value creation Maximizing ROE is not the same thing as maximizing value. Why? ROE depends on leverage of the company ROE changes if interest rates or accounting policies change ROE has a tendency to revert to normal levels 6
7 ROE decomposition separates operating performance from asset turnover and financial strategy Standard 2-step ROE-decomposition ROE = ROA x Equity multiplier = Net Profit Total Assets x Total Assets Shareholders' Equity Standard 3-step ROE-decomposition ROE = Profit margin x Asset turnover x Equity multiplier = Net Profit x Total Assets x Total Assets Shareholders' Equity ROE-decomposition is also known as the DuPont analysis Problems: operating and financing performance in net profit and asset ownership not separated 7
8 Advanced ROE decomposition separates return on business assets and leveraged return Advanced 2-step ROE-decomposition ROE = Return on Business Assets (ROBA) + Spread x Financial Leverage where ROBA = NOPAT+NIPAT Business Assets Spread = ROBA Interest expense after tax / Debt Debt Financial leverage = Equity Interest expense after tax = Interest expense * (1 Tax Rate) Net operating profit after taxes (NOPAT) = Net profit NIPAT + Interest expense after tax Net Investment Profit After Taxes (NIPAT) = (Investment income + Interest income) * (1 Tax Rate) Business assets = Net operating and investment assets 8
9 3-step version further separates operating asset and investment asset performance Advanced 3-step ROE-decomposition ROBA NOPAT Business Assets NIPAT Business Assets NOPAT Operating assets Operating assets Business assets NIPAT Investment assets Investment assets Business assets Return Operating assets on operating assets Business assets Investment assets Return on investment assets Business assets ROE = Return on operating assets x % of operating assets + Return on investment assets x % of investment assets + Spread x Financial leverage 9
10 Exact definitions for the 3-step anvanced ROE decomposition Operating assets = Operating working capital + Net (non-current) operating assets Investment assets = Minority equity investments + Other nonoperating investments + Excess cash and marketable securities Debt = Total interest-bearing non-current liabilities + Current debt and current portion of non-current debt Operating working capital = (Current assets Excess cash and marketable securities) (Current liabilities Current debt and current portion of non-current debt) Net non-current operating assets = Non-current tangible and intangible assets + (Net) derivatives (Net) deferred tax liability - Non-interest-bearing non-current liabilities 10
11 Advanced ROE decomposition example What conclusions can you make based on these numbers? 11
12 Common profitability measures Net Profit x Total Assets x Total Assets Shareholders' Equity Net profit margin = Gross profit margin = Net Profit x Total Assets x Total Assets Shareholders' Equity - Cost of EBITDA margin = EBIT margin = NOPAT margin = Earnings Before Interest, Taxes, Depreciation and Amortization Earnings Before Interest and Taxes Net Operating Profit After Taxes For each profitability measure, describe a situation in which this measure would be the most relevant metric 12
13 Net Profit Common asset turnover (efficiency) measures x Total Assets x Total Assets Shareholders' Equity Working capital turnover = / Working capital Operating working capital turnover = /Operating working capital Fixed asset turnover = / Fixed assets Non-current asset turnover = / Non-current assets Total asset turnover = / Total assets Trade receivables turnover = / Trade receivables Trade payables turnover = Purchases / Trade payables Inventories turnover = Cost of sales / Inventories For each asset turnover measure, describe a situation in which this measure would be the most relevant metric 13
14 Asset turnover metrics example Net Profit x Total Assets x Total Assets Shareholders' Equity What conclusions can you make based on these numbers? 14
15 Difference between liquidity and long-term solvency How would you verbally define liquidity? When is liquidity rather than long-term solvency important? How would you verbally define long-term solvency? When is long-term solvency rather than liquidity important? 15
16 Net Profit x Total Assets x Total Assets Shareholders' Equity Common financial leverage ratios liquidity Current Ratio = Quick Ratio = Cash Ratio = Operating Cash Flow Ratio = Current Assets Current Liabilites Cash and Marketable Securities + Trade Receivables Current Liabilites Cash and Marketable Securities Current Liabilites Cash Flow From Operations Current Liabilities 16
17 Liquidity metrics example Net Profit x Total Assets x Total Assets Shareholders' Equity What conclusions can you make based on these numbers? 17
18 Common financial leverage ratios longterm solvency Equity Multiplier = Total Assets Total Equity Debt-to-Equity = Current Debt + Non-Current Debt Shareholders' Equity Debt-to-Capital = Current Debt + Non-Current Debt Current Debt + Non-Current Debt + Shareholders' Equity Should you use market or book values for these measures? 18
19 Agenda Use of financial ratios ROE decomposition Growth, risk, and, cash flow 19
20 Sustainable growth rate analysis tells you in which direction profitability and solvency ratios are heading Value generation ROE = Profit margin x Asset turnover x Equity multiplier ROE = Return on business assets + Spread x Financial leverage Value distribution Dividend payout ratio = Cash dividends paid / Net profit 20
21 How quickly can a firm grow? Internal growth rate How quickly can the firm grow without any external financing? < Sustainable growth rate (g*) How quickly can the firm grow with external debt financing, but still keeping D/E ratio constant? 21
22 Sustainable growth rate sets growth rate with current capital structure It is useful also to examine the growth rate that can be maintained without any further equity issues. This growth rate allows further debt issues which maintain the capital structure, i.e. the level of Equity/Assets, at the present level. This sustainable growth rate can be determined as follows: Sustainable growth rate (g*) = Plowback ratio (= 1 Dividend payout ratio) x Return on equity 22
23 What happens if planned growth does not match sustainable growth rate? If planned growth (g) > g*, what has the company do? What happens if the company fails to do one or more of these actions? 23
24 Sustainable growth rate adds one more layer to the ROE decomposition 24
25 Interest and debt service ratios are popular metrics especially from debtholders perspective (1/2) Interest coverage (Earnings basis) Net Profit + Interest Expense + Tax Expense Interest Expense Interest coverage (Cash flow basis) Cash Flow From Operations + Interest Expense + Tax Expense Interest Expense 25
26 Interest and debt service ratios are popular metrics especially from debtholders perspective (2/2) Debt service coverage ratio (DSCR, earnings basis) Debt service coverage ratio (DSCR, cash flow basis) Sometimes the numerator adds back non-cash charges. What is the intuition for doing this? 26
27 Cash flow analysis is a sibling of the financial ratio analysis Why cash flow analysis? Why not just financial ratio analysis? Cash (vs accrual) based view on company s financial situation: what is the earnings quality? How much cash do operations produce? How much cash is used for working capital and non-current asset investments? Is this very different from depreciation? Does company finance growth by internal or external funds? How easily can company pay debt obligations? Is debt needed to pay out dividends? 27
28 Cash flow analysis example What conclusions can you make based on these numbers? Which of these conclusions you cannot do based on earningsbased financial analysis? 28
CMA 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 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 informationExam 1 Sample Questions FINAN303 Principles of Finance McBrayer Spring 2018
Sample Multiple Choice Questions 1. The effect of a stock dividend (i.e., stock split) is that it a. Reduces owner s equity. b. Increases retained earnings. c. Reduces the liabilities of the firm. d. Increases
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 informationAccounting and Ratio Analysis
Accounting and Ratio Analysis Essentials in Management Prof. Sudhakar Balachandran Understanding Financial Performance: Ratio Analysis 1 Objectives: Understanding Financial Performance 1) Introduce the
More informationChapter 17. Financial Statement Analysis
Chapter 17 Financial Statement Analysis 17-2 Topics Covered Financial Ratios DuPont System Using Financial ratios Measuring Company Performance The Role of Financial Ratios 17-3 Financial Ratios Five types
More informationCurriculum designed for use with the Iowa Electronic Markets Cynthia J. Brown Marilyn M. Dutton Thomas A. Rietz
Financial Statement Analysis Curriculum designed for use with the Iowa Electronic Markets by Cynthia J. Brown Marilyn M. Dutton Thomas A. Rietz ١ Financial Statement Analysis: Lecture Outline Review of
More informationWriting a Financial Report: Some Guidelines
Writing a Financial Report: Some Guidelines Table of contents 1. A guiding principle... 2 2. An example of analysis grid... 3 3. Financial ratios: the toolkit of the financial analyst... 4 3.1. Growth
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 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 informationIndex. Business unit, 311, 350 Business-unit level strategies, 309, 311 Business-unit strategies, 311, 350
387 Index A Absenteeism rate, 239 Accounting, 26, 93 Definition, 3 Accounting system, 14 Accrual accounting, 176, 182, 194 Activity-based budgeting, 141 142, 150 Activity-based costing, 67 69, 71, 93,
More informationAppendix: Financial Definitions. Basic Accounting Reports
Appendix: Financial Definitions Several standardized methods have been created to analyze business financial data. These numbers are easily computed from the standard reported accounting data. The various
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 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 informationProblem Set One. Name
MK602 Problem Set One Name The first part of the case, presented in Chapter 3 (pages 123-125), discussed the situation that Computron Industries was in after an expansion program. Thus far, sales have
More informationContents. Preface... xiii. CHAPTER 1 Introduction to Management Accounting and Control CHAPTER 2 Management Reporting... 29
v Preface... xiii CHAPTER 1 Introduction to Management Accounting and Control... 1 The Concepts of Management, Accounting, and Control... 2 A Definition of Management... 2 A Definition of Accounting...
More informationSHORT QUESTIONS ANSWERS FINANCIAL MANAGEMENT MGT201 By
SHORT QUESTIONS ANSWERS FINANCIAL MANAGEMENT MGT201 By http://vustudents.ning.com 1- What is Financial Management? The procedure of managing the financial resources, as well as accounting and financial
More informationMBF1223 Financial Management. Lecture 8: Financial Ratios and Firm Performance
MBF1223 Financial Management Lecture 8: Financial Ratios and Firm Performance Learning Objectives 1. Create, understand, and interpret common-size financial statements. 2. Calculate and interpret financial
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 2. Learning Objectives. Topics Covered. Cash Flow and Financial Statement Analysis
Chapter 2 Cash Flow and Financial Statement Analysis Learning Objectives Interpret information contained in the balance sheet, income statement, and statement of cash flows. Explain why income differs
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 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 informationPresented by SCOTT TRANSUE
Presented by SCOTT TRANSUE Cash vs. accrual Key definitions Balance sheets Income statements Cash flow statements Break-even analysis Today s Agenda Ratios Recognizes transactions when they occur Recognizes
More informationFINANCIAL ANALYSIS TOOLS: DESCRIPTION CHAPTER 7 FINANCIAL ANALYSIS TECHNIQUES GRAPHICS: EXAMPLE GRAPHICS: EXAMPLE
Presenter s name Presenter s title dd Month yyyy CHAPTER 7 FINANCIAL ANALYSIS TECHNIQUES FINANCIAL ANALYSIS TOOLS: DESCRIPTION Graphics Regression Common-Size Analysis Financial Ratio Analysis Copyright
More informationUnderstanding Financial Management: A Practical Guide Problems and Answers
Understanding Financial Management: A Practical Guide Problems and Answers Chapter 3 Interpreting Financial Ratios 3.2 Liquidity Ratios 1. Ink Inc. has had a stable current ratio over the past three years
More informationACTY 7292 Financial Statement Analysis Final Exam Semester 1, 2015
Faculty of Creative Industries & Business Department of Accounting and Finance Bachelor of Business ACTY 7292 Financial Statement Analysis Final Exam Date: Wednesday 1 st July 2015 Start time: 8.30AM 11.40AM
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 informationWorking with Financial Statements, Part II
Working with Financial Statements, Part II Faculty of Business Administration Lakehead University Spring 2003 May 7, 2003 Outline of Chapter 3, Part II 3.3 Ratio Analysis 3.4 The DuPont Identity 3.5 Using
More informationFirm valuation (1) Class 6 Financial Management,
Firm valuation (1) Class 6 Financial Management, 15.414 Today Firm valuation Dividend discount model Cashflows, profitability, and growth Reading Brealey and Myers, Chapter 4 Firm valuation The WSJ reports
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 informationFUNDAMENTALS OF HEALTHCARE FINANCE. Online Appendix B. Financial Analysis Ratios
FUNDAMENTALS OF HEALTHCARE FINANCE Online Appendix B Financial Analysis Ratios INTRODUCTION In Chapter 13, we indicated that financial ratio analysis is a technique commonly used to help assess a business
More informationChapter 02 Evaluating Financial Performance
Chapter 02 Evaluating Financial Performance Multiple Choice Questions 1. The most popular yardstick of financial performance among investors and senior managers is the: A. profit margin. B. return on equity.
More informationFull file at
Chapter 03 1. Projected future financial statements are called: A. plug statements. B. pro forma statements. C. reconciled statements. D. aggregated statements. E. comparative statements. 2. The extended
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 informationGeorgia Banking School Financial Statement Analysis. Dr. Christopher R Pope Terry College of Business University of Georgia
Georgia Banking School Financial Statement Analysis Dr. Christopher R Pope Terry College of Business University of Georgia Introduction Objective My objective is to introduce you to the analysis of financial
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 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 informationHomework Solutions - Lecture 1
Homework Solutions - Lecture 1 1. You are analyzing a company with the expected future cash flows shown below. Based on current market prices, the market value of the firm s equity is $1,96.9. The outstanding
More informationCorporate Finance. Week 3 Financial Statement Analysis II
Corporate Finance 1-1 Week 3 Financial Statement Analysis II 1-1 Asset Efficiency or Turnover Measures 1-2 A first broad measure of efficiency is asset turnover: Sales Asset Turnover = Total Assets Fixed
More informationCHAPTER 2 ANALYSIS OF FINANCIAL STATEMENTS
CHAPTER 2 ANALYSIS OF FINANCIAL STATEMENTS 1 Learning Outcomes LO.1 Describe the basic financial information that is produced by corporations and explain how the firm s stakeholders use such information.
More informationIs the company able to meet its current debt obligations? Are the company s assets being managed efficiently? Are working capital accounts at
Is the company able to meet its current debt obligations? Are the company s assets being managed efficiently? Are working capital accounts at suitable levels? Is the company profitable? How does the company
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 informationFinancial Accounting & Valuation Principles
Financial Accounting & The Insurance Case GAS Verzekeringen KULeuven Fabian Suarez May 2008 www.actuarisk.be Financial Accounting & : The Insurance Case KULeuven - May 2008 2 Agenda 1. 2. 3. 4. Valuing
More informationTaxes. Financial Statements: Things to Keep in Mind. Cash Flow and Taxes. BUSI 7110/7116 Yost
Cash Flow and Taxes Financial Statements: Things to Keep in Mind Backward vs. Forward Looking Book Values vs. Market Values Accounting Numbers vs. Cash Flows Tax Deductible vs. Taxable Notes to Financial
More informationChapter 2. Data for Financial Decision Making
Chapter 2 Data for Financial Decision Making Data for Financial Decision Making Introductory concepts the need for good data Financial accounting data Financial ratios Managerial accounting data Other
More informationAdvanced Valuation Methods. Analyzing Historical Performance. Financial Analysis
1 Advanced Valuation Methods Analyzing Historical Performance Financial Analysis Goal Assess performance of a firm in the context of shareholder value versus competitive advantage Productivity of employed
More informationSession 2, Sunday, April 2nd (1:30-5:00) v Association for Financial Professionals. All rights reserved. Session 3-1
Session 2, Sunday, April 2nd (1:30-5:00) v2.0 2014 Association for Financial Professionals. All rights reserved. Session 3-1 Chapters Covered Financial Accounting and Reporting: Part I, Domain B Chapter
More informationAll In One MGT201 Mid Term Papers More Than (10) BY
All In One MGT201 Mid Term Papers More Than (10) BY http://www.vustudents.net MIDTERM EXAMINATION MGT201- Financial Management (Session - 2) Question No: 1 ( Marks: 1 ) - Please choose one Why companies
More informationAnalysis of Financial Statements
Question 1: What are the key elements in the primary financial statements that are used by executives for firm analysis? The three key financial statements that business executives and financial analysts
More informationFinancial Statements Analysis
Financial Statements Analysis Agenda I. The Importance of Financial Statements Analysis II. Overview of the 3 Statements a) Income Statement b) Cash Flow Statement c) Balance Sheet III. How Statements
More information1. An inventory turnover ratio of 10 means that, on average, items are held in inventory for 10 days.
Chapter 02 Evaluating Financial Performance True / False Questions 1. An inventory turnover ratio of 10 means that, on average, items are held in inventory for 10 days. True False 2. All else equal, an
More informationFinancial Statement & Security Analysis Case Study. Bilgin Demir. Master of Science Financial Engineering. Stevens Institute of Technology
Financial Statement & Security Analysis Case Study Bilgin Demir Master of Science Financial Engineering Stevens Institute of Technology School of Systems and Enterprises Hoboken, New Jersey blgndemir@gmail.com
More informationRatio Analysis Part II
Chapter-04 Ratio Analysis Part II Ex: 1.1 Profitability Ratios Profitable Ratios are a class of financial metrics that are used to assess a business's ability to generate earnings as compared to its expenses
More informationChapter 7. Analyzing Common Stocks. Security Analysis. Top-Down Approach Kaplan Financial
Chapter 7 Analyzing Common Stocks Security Analysis Process of gathering, organizing, and using information to determine the intrinsic value of a common stock. Intrinsic value is the underlying or inherent
More informationFinance and Accounting elective / SBWL Controlling Wintersemester 2012/ 2013 Exam Value-based Management Feb. 21, 2013 EXAM
TECHNISCHE UNIVERSITÄT MÜNCHEN Fakultät für Wirtschaftswissenschaften Lehrstuhl für Betriebswirtschaftslehre - Controlling Prof. Dr. Gunther Friedl Finance and Accounting elective / SBWL Controlling Wintersemester
More informationChapter 3 Financial Statements Analysis
Chapter 3 Financial Statements Analysis 1 Acknowledgement This work is reproduced, based on the book [Ross, Westerfield, Jaffe and Jordan Core Principles and Applications of Corporate Finance ]. This work
More informationAccounting for Non-Financial Managers, 4e Table of Contents
Accounting for Non-Financial Managers, 4e Table of Contents Chapter 1 Accounting: Who Needs It? The Marketing Manager s Proposal The Human Resources Manager s Situation The Production Manager s Dilemma
More informationDUKE UNIVERSITY, FUQUA SCHOOL OF BUSINESS ACCOUNTG 512F: FUNDAMENTALS OF FINANCIAL ANALYSIS. Note on Financial Statements and Financial Ratios
DUKE UNIVERSITY, FUQUA SCHOOL OF BUSINESS ACCOUNTG 512F: FUNDAMENTALS OF FINANCIAL ANALYSIS Note on Financial Statements and Financial Ratios I. Review of Financial Statements The Balance Sheet Financial
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 informationAFP Financial Planning & Analysis Learning System Session 2, Sunday, April 2nd (1:30-5:00)
AFP Financial Planning & Analysis Learning System Session 2, Sunday, April 2nd (1:30-5:00) Chapters Covered Financial Accounting and Reporting: Part I, Domain B Chapter 7 Ratio Analysis: Part I, Domain
More informationWeek-2 FINC Analysis of Financial Statements. Balance Sheets
Dr. Ahmed FINC 5000 Week-2 Name Analysis of Financial Statements Balance Sheets Assets 2003 2004 2005e Cash $ 9,000 $ 7,282 $ 14,000 Short-Term Investments. 48,600 20,000 71,632 Accounts Receivable 351,200
More informationFinancial Planning Process
Financial Planning Process 1. Forecast financial statements under alternative operating plans. 2. Determine amount of capital needed to support the plan. 3. Forecast the funds that will be generated internally
More informationFINANCIAL STATEMENT ANALYSIS & RATING CAMPARI S.P.A.
FINANCIAL STATEMENT ANALYSIS & RATING CAMPARI S.P.A. Year 2012-2014 Report developed on www.cloudfinance.it 2 Sommario Financial Highlights... 3 Reclassified Financials... 8 Structure of Assets & Liabilities...
More informationLearning Goal 1: Review the contents of the stockholders' report and the procedures for consolidating international financial statements.
Principles of Managerial Finance, 12e (Gitman) Chapter 2 Financial Statements and Analysis Learning Goal 1: Review the contents of the stockholders' report and the procedures for consolidating international
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 informationFinance and Accounting for Interviews
This document was developed and written by Ian Lee. All information is meant for public use and purposed for the free transfer of knowledge to interested parties. Send questions and comments to ianlee@uclalumni.net
More informationLecture 2. Financial Statements, Cash Flows, and Taxes and Analysis of Financial Statements (Ch 2, Ch3)
Lecture 2. Financial Statements, Cash Flows, and Taxes and Analysis of Financial Statements (Ch 2, Ch3) Basic concepts of Financial Statements (FSs) Why the company needs to construct FSs? To provide information
More informationFINA Homework 2
FINA3313-005 Homework 2 Chapter 04 Measuring Corporate Performance True / False Questions 1. The higher the times interest earned ratio, the higher the interest expense. 2. The asset turnover ratio and
More informationHANDOUT ANALYSIS FINANCIAL RATIO S. COURSE : FINANCIAL STATEMENT ANALYSIS LECTURER : PATRIANI W. DEWANTI, M.Acc.
HANDOUT ANALYSIS FINANCIAL RATIO S COURSE : FINANCIAL STATEMENT ANALYSIS LECTURER : PATRIANI W. DEWANTI, M.Acc. ACCOUNTING DEPARTMENT FACULTY OF ECONOMICS YOGYAKARTA STATE UNIVERSITY 1 FINANCIAL STATEMENT
More informationReturn on Invested Capital and Profitability Analysis
Return on Invested Capital and Profitability Analysis 8 CHAPTER McGraw-Hill/Irwin 2007, The McGraw-Hill Companies, All Rights Reserved Return on Invested Capital Importance of Joint Analysis Joint analysis
More informationMGT201 Financial Management All Subjective and Objective Solved Midterm Papers for preparation of Midterm Exam2012 Question No: 1 ( Marks: 1 ) - Please choose one companies invest in projects with negative
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 informationThe Du Pont System of the Analysis of Return Ratios Applied to Sears, Roebuck & Co.
The Du Pont System of the Analysis of Return Ratios Applied to Sears, Roebuck & Co. Return on Assets (ROA) 1 Return on Equity (ROE) 2 Calculation for fiscal year 2003 Calculation for fiscal year 2003 (
More informationFINC 664 Business Analysis Using Financial Statements. What will we cover this week? Forecasting. FINC 664 week 3 1. Week 3 Forecasting
FINC 664 Business Analysis Using Financial Statements Week 3 Forecasting Michael D. Kinsman, Ph.D. FINC 664 week 3 1 What will we cover this week? This week, we will discuss the single most important topic
More informationPortfolio Project. Ashley Moss. MGMT 575 Financial Analysis II. 3 November Southwestern College Professional Studies
Running head: TOOLS 1 Portfolio Project Ashley Moss MGMT 575 Financial Analysis II 3 November 2012 Southwestern College Professional Studies TOOLS 2 Table of Contents 1. Valuation and Characteristics of
More informationTop 8. Capstone Financial Ratios
Financial Ratio Review Top 8 Plus Capstone Financial Ratios Kenneth EA Wendeln 2012 KEAW v5 Top 8 Key Financial Ratios Profitability Liquidity Return on Owners Equity % Current Ratio # n.nn EPS Earnings
More informationStock Rover Profile Metrics
Stock Rover Profile Metrics Average Volume (3m) The average number of shares traded per day over the past 3 months. Company Unit: Name The full name of the company. Employees The number of direct employees.
More informationFinancial Statement Analysis
Without financial statement analysis, finance statements would be comprised of primarily historical data. The analysis converts the data into information that is useful to understanding the company and
More informationBusiness Assignment 2 Solutions. 1. Consider the balance sheets and income statements for Sunrise, Inc. depicted in Table 1 and Table 2.
Business 2019 Assignment 2 Solutions 1. Consider the balance sheets and income statements for Sunrise, Inc. depicted in Table 1 and Table 2. (a) For year 2000, calculate Sunrise s cash flow from assets,
More information1. An inventory turnover ratio of 10 means that, on average, items are held in inventory for 10 days.
Analysis for Financial Management 11th Edition Higgins Test Bank Full Download: http://testbanklive.com/download/analysis-for-financial-management-11th-edition-higgins-test-bank/ Chapter 02 Evaluating
More informationWho of the following make a broader use of accounting information?
Who of the following make a broader use of accounting information? Accountants Financial Analysts Auditors Marketers Which of the following is NOT an internal use of financial statements information? Planning
More informationCHARTERED INSTITUTE OF STOCKBROKERS. September 2018 Specialised Certification Examination. Paper 2.5 Equities Dealing
CHARTERED INSTITUTE OF STOCKBROKERS September 2018 Specialised Certification Examination Paper 2.5 Equities Dealing 2 Question 2 - Equity Valuation and Analysis 2a) An analyst gathered the following data:
More informationASSIGNMENT MEMORANDUM : FINANCIAL MANAGEMENT 2 (FM202)
Page 1 of 6 ASSIGNMENT MEMORANDUM SUBJECT : FINANCIAL MANAGEMENT 2 () ASSIGNMENT : 2 nd SEMESTER 2012 QUESTION 1 [25] 1.1. e 1.2. a 1.3. b 1.4. b 1.5. a 1.6. b 1.7. d 1.8. a 1.9. a 1.10. b 1.11. c 1.12.
More informationn Financial Statement Analysis n Dollar and Percentage Changes n Common Sized Statements n Ratio Analysis McGraw-Hill /Irwin McGraw-Hill /Irwin
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
More informationAnalysis of Accounting Ratios
CA BUSINESS SCHOOL EXECUTIVE DIPLOMA IN BUSINESS AND ACCOUNTING SEMESTER 2: Interpretation of Financial Statements Analysis of Accounting Ratios M B G Wimalarathna (FCA, FCMA, MCIM, FMAAT, MCPM)(MBA PIM/USJ)
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 of Accounting Ratios
CA BUSINESS SCHOOL POSTGRADUATE DIPLOMA IN BUSINESS FINANCE AND STRATEGY SEMESTER 1: Financial Statements Analysis Analysis of Accounting Ratios M B G Wimalarathna (FCA, FCMA, MCIM, FMAAT, MCPM)(MBA PIM/USJ)
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 informationCSCA Reading List. Copyright 2017 Institute of Certified Management Accountants 1. Updated 8/25/17
CSCA Reading List 1 CSCA Reading List Certified in Strategy and Competitive Analysis Strategy Textbooks referenced in the Resource Guide (listed in alphabetical order): Note: Any ONE of these strategic
More informationFahmi Ben Abdelkader 5/1/ :34 PM 1. Walking Through From Earnings to Cash Flows. Accrual-based Versus Cash-Flow-based performance measures
Financial Statement Analysis Section 5. The analytical Cash Flow Statement Accrual-based Versus Cash-Flow Flow-based performance measures Students version Fahmi Ben Abdelkader 5/1/2017 10:34 PM 1 Cash-flow
More informationFinancial Statements, Cash Flow and Taxes
Financial Statements, Cash Flow and Taxes 1. The concept of financial statements 2. Accounting profit and cash flow 3. Modifying accounting data for managerial decisions Financial Statements Annual report:
More informationGoldstar's Financial Condition Analysis for the Period from to
Goldstar's Financial Condition Analysis for the Period from 01.01.2008 to 31.12.2010 1. Goldstar's Financial Position Analysis 1.1. Structure of the Assets and Liabilities 1.2. Net Assets (Net Worth) 1.3.
More informationCVX Chevron Corporation Sector: Energy SELL
Analysts: Zachary Haller, Andrew Paley Brown and Sean Miller Washburn University Applied Portfolio Management CVX Sector: Energy SELL Report Date: 4/18/2016 Market Cap (mm) $157,566 Annual Dividend $4.28
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 informationEXC Exelon Corporation Sector: Utilities HOLD
Analysts: Alexa Bowen, Blake Porter and Kennedy White Washburn University Applied Portfolio Management EXC Sector: Utilities HOLD Report Date: 4/18/2016 Market Cap (mm) $31,337 Annual Dividend $1.24 2
More informationThe Effects of ROE Factors by New Decomposition Method on the Stock Price in Korea KOSPI Market
The Effects of ROE Factors by New Decomposition Method on the Stock Price in Korea KOSPI Market Changrae Park, Department of Accounting, Gangneung-Wonju National University, South Korea. E-mail: pcr@gwnu.ac.kr
More informationFinancial Analyst Training Programme 10 Days
Financial Analyst Training Programme 10 Days Delegate Profile: This course is targeted at delegates who are new to banking and finance and provides a comprehensive overview of financial reporting, financial
More informationFREDERICK OWUSU PREMPEH
EXCEL PROFESSIONAL INSTITUTE 3.3 ADVANCED FINANCIAL MANAGEMENT LECTURES SLIDES FREDERICK OWUSU PREMPEH EXCEL PROFESSIONAL INSTITUTE Lecture 9 Valuation and the use of free cash flows The free cash flow
More information