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Kultur Dokumente
LEARNING OBJECTIVES
2
Financial Analysis
3
USERS OF FINANCIAL
ANALYSIS
Trade
creditors
Suppliers of long-term debt
Investors
Management
NATURE OF RATIO
ANALYSIS
A
Standards of
Comparison
Time
series analysis
Inter-firm analysis
Industry analysis
Proforma financial statement analysis
Liquidity
ratios
Leverage ratios
Activity ratios
Profitability ratios
LIQUIDITY RATIOS
8
Liquidity
Cont
9
LEVERAGE RATIOS
10
Cont
11
Cont
12
ACTIVITY RATIOS
13
PROFITABILITY RATIOS
16
The
Generally,
Cont
17
Cont
18
Cont
19
Cont
20
Cont
21
22
EVALUATION OF A
FIRMS EARNING
RONA (or ROCE) is the measure of the firms operating
POWER:
DUPONT
performance. It indicates the firms earning power.
ANALYSIS
RONA can be computed as follows:
A firm
23
COMPARATIVE
STATEMENTS ANALYSIS
A
TREND ANALYSIS
24
In
Cont
25
For
26
Example: Hindustan
Manufacturing Company
INTER-FIRM ANALYSIS
27
The
28
Example: Construction
industry: Inter-firm
Comparison Market
Share
29
30
UTILITY OF RATIO
ANALYSIS
the
Profitability
analysis
Assets utilization
Liquidity analysis
Strategic Analysis
32
CAUTIONS IN USING
RATIO ANALYSIS
Standards
for comparison
Company differences
Price level changes
Different definitions of variables
Changing situations
Historical data