Beruflich Dokumente
Kultur Dokumente
Financial Statement
Analysis
6-1
Financial
Statement Analysis
Financial
A
Statements
Ratio
Analysis
Trend
Analysis
Common-Size
6-2
Bondholders
-- Focus on the
long-term cash flow of the firm.
Shareholders
-- Focus on the
profitability and long-term health of
the firm.
6-3
6-4
Primary Types of
Financial Statements
Balance Sheet
Income Statement
6-5
Basket Wonders
Income Statement
Basket Wonders Statement of Earnings (in thousands)
for Year Ending December 31, 19X3a
Net Sales
$ 2,211 Cost of
Goods Sold b 1,599
Gross Profit $
612 SG&A
Expenses c
402
EBITd
$
210
Interest Expensee
59
EBT f $
151 Income
Taxes
60 EATg
$
91 Cash Dividends
38 Increase in RE
$
53
6-8
a. Measures profitability
over a time period.
b. Received, or receivable,
from customers.
c. Sales comm., adv.,
officers salaries, etc.
d. Operating income.
e. Cost of borrowed funds.
f. Taxable income.
g. Amount earned for
shareholders.
Framework for
Financial Analysis
Trend / Seasonal Component
Framework for
Financial Analysis
Health of a Firm
1. Analysis of the funds
needs of the firm.
2. Analysis of the financial
condition and profitability
of the firm.
6-10
Financial Ratios
1.
2.
3.
4.
Individually
Over time
In combination
In comparison
Framework for
Financial Analysis
6-11
Framework for
Financial Analysis
6-12
Determining
the
financing
needs of
the firm.
A Financial
Manager
must
consider all
three jointly
when
determining
the
financing
needs of the
firm.
Framework for
Financial Analysis
6-13
Determining
the
financing
needs of
the firm.
Negotiations
with
suppliers of
capital.
Types of
Comparisons
Internal
Comparisons
External
Comparisons
Examples:
Robert Morris
Associates
Dun & Bradstreet
Almanac of
Business and
Industrial
Financial Ratios
Liquidity Ratios
Balance Sheet Ratios
Current
Liquidity Ratios
Current Assets
Current Liabilities
$1,195 = 2.39
$500
Liquidity Ratio
Comparisons
Current Ratio
Year
BW
Industry
19X3
2.39
2.15
19X2
2.26
2.09
19X1
1.91
2.01
Liquidity Ratios
Balance Sheet Ratios
Acid-Test (Quick)
Liquidity Ratios
Shows a firms
ability to meet
current liabilities
with its most liquid
assets.
6-18
Liquidity Ratio
Comparisons
Acid-Test Ratio
Year
BW
Industry
19X3
1.00
1.25
19X2
1.04
1.23
19X1
1.11
1.25
Industry
2.15
1.25
6-20
2.3
2.1
1.9
1.7
1.5
19X1
6-21
BW
Industry
19X2
Analysis Year
19X3
Ratio Value
1.5
1.3
0.8
0.5
19X1
6-22
BW
Industry
1.0
19X2
Analysis Year
19X3
6-23
Debt-to-Equity
Total Debt
Shareholders Equity
For Basket Wonders
December 31, 19X3
$1,030 = .90
$1,139
Financial Leverage
Ratio Comparisons
Debt-to-Equity Ratio
6-25
Year
BW
Industry
19X3
.90
.90
19X2
.88
.90
19X1
.81
.89
Debt-to-Total-Assets
Total Debt
Total Assets
For Basket Wonders
December 31, 19X3
$1,030 = .47
$2,169
Financial Leverage
Ratio Comparisons
Debt-to-Total-Asset Ratio
6-27
Year
BW
Industry
19X3
.47
.47
19X2
.47
.47
19X1
.45
.47
Total Capitalization
Financial Leverage
Ratios
Total Debt
Total Capitalization
$1,030 = .62
$1,669
Financial Leverage
Ratio Comparisons
Total Capitalization Ratio
Year
BW
Industry
19X3
.62
.60
19X2
.62
.61
19X1
.67
.62
Coverage Ratios
Income Statement
Ratios
Coverage Ratios
Indicates a firms
ability to cover
interest charges.
6-30
Interest Coverage
EBIT
Interest Charges
For Basket Wonders
December 31, 19X3
$210 = 3.56
$59
Coverage
Ratio Comparisons
Interest Coverage Ratio
Year
BW
Industry
19X3
3.56
5.19
19X2
4.35
5.02
19X1
10.30
4.66
Ratio Value
9.0
7.0
5.0
3.0
19X1
6-32
BW
Industry
19X2
Analysis Year
19X3
6-33
Activity Ratios
Income Statement /
Balance Sheet
Ratios
Activity Ratios
Indicates quality of
receivables and how
successful the firm is in
its collections.
6-34
Receivable Turnover
(Assume all sales are credit sales.)
$2,211 = 5.61
$394
Activity Ratios
Income Statement /
Balance Sheet
Ratios
Activity Ratios
Average number of days
that receivables are
outstanding.
(or RT in days)
6-35
365
5.61
= 65 days
Activity
Ratio Comparisons
Average Collection Period
Year
BW
Industry
19X3
65.0
65.7
19X2
71.1
66.3
19X1
83.6
69.2
Activity Ratios
Income Statement /
Balance Sheet
Ratios
Activity Ratios
Indicates the
promptness of payment
to suppliers by the firm.
6-37
$1551
= 16.5
$94
Activity Ratios
Income Statement /
Balance Sheet
Ratios
Activity Ratios
Average number of days
that payables are
outstanding.
6-38
PT in Days
Days in the Year
Payable Turnover
For Basket Wonders
December 31, 19X3
365
16.5
= 22.1 days
Activity
Ratio Comparisons
Payable Turnover in Days
Year
BW
Industry
19X3
22.1
46.7
19X2
25.4
51.1
19X1
43.5
48.5
Is this good?
Activity Ratios
Income Statement /
Balance Sheet
Ratios
Activity Ratios
Indicates the
effectiveness of the
inventory management
practices of the firm.
6-40
Inventory Turnover
Cost of Goods Sold
Inventory
For Basket Wonders
December 31, 19X3
$1,599 = 2.30
$696
Activity
Ratio Comparisons
Inventory Turnover Ratio
Year
BW
Industry
19X3
2.30
3.45
19X2
2.44
3.76
19X1
2.64
3.69
Ratio Value
4.0
3.5
3.0
BW
Industry
2.5
2.0
19X1
19X2
Analysis Year
6-42
19X3
Activity Ratios
Income Statement /
Balance Sheet
Ratios
Activity Ratios
Indicates the overall
effectiveness of the firm
in utilizing its assets to
generate sales.
6-43
$2,211 = 1.02
$2,169
Activity
Ratio Comparisons
Total Asset Turnover Ratio
Year
BW
Industry
19X3
1.02
1.17
19X2
1.03
1.14
19X1
1.01
1.13
Profitability Ratios
Income Statement /
Balance Sheet
Ratios
Profitability Ratios
Indicates the efficiency
of operations and firm
pricing policies.
6-45
$612 = .277
$2,211
Profitability
Ratio Comparisons
Gross Profit Margin
Year
BW
Industry
19X3
27.7%
31.1%
19X2
28.7
30.8
19X1
31.3
27.6
35.0
32.5
30.0
BW
Industry
27.5
25.0
19X1
19X2
Analysis Year
6-47
19X3
Profitability Ratios
Income Statement /
Balance Sheet
Ratios
Profitability Ratios
Indicates the firms
profitability after taking
account of all expenses
and income taxes.
6-48
$91 = .041
$2,211
Profitability
Ratio Comparisons
Net Profit Margin
Year
BW
Industry
19X3
4.1%
8.2%
19X2
4.9
8.1
19X1
9.0
7.6
10
9
8
7
BW
Industry
6
5
4
19X1
19X2
Analysis Year
6-50
19X3
Profitability Ratios
Income Statement /
Balance Sheet
Ratios
Profitability Ratios
Indicates the profitability
on the assets of the firm
(after all expenses and
taxes).
6-51
Return on Investment
Net Profit after Taxes
Total Assets
For Basket Wonders
December 31, 19X3
$91 = .042
$2,160
Profitability
Ratio Comparisons
Return on Investment
Year
BW
Industry
19X3
4.2%
9.8%
19X2
5.0
9.1
19X1
9.1
10.8
12
10
8
BW
Industry
6
4
19X1
19X2
Analysis Year
6-53
19X3
Profitability Ratios
Income Statement /
Balance Sheet
Ratios
Profitability Ratios
Indicates the profitability
to the shareholders of
the firm (after all
expenses and taxes).
6-54
Return on Equity
Net Profit after Taxes
Shareholders Equity
For Basket Wonders
December 31, 19X3
$91 = .08
$1,139
Profitability
Ratio Comparisons
Return on Equity
Year
BW
Industry
19X3
8.0%
17.9%
19X2
9.4
17.2
19X1
16.6
20.4
21.0
17.5
14.0
BW
Industry
10.5
7.0
19X1
19X2
Analysis Year
6-56
19X3
ROI19X3
ROE19X3
6-59
6-60
Common-size Analysis
An analysis of percentage
financial statements where all
balance sheet items are divided
by total assets and all income
statement items are divided by
net sales or revenues.
6-61
19X2
19X3
19X1
19X2
19X3
Cash
AR
Inv
Other CA
148
283
322
10
100
410
616
14
90
394
696
15
12.10
23.14
26.33
0.82
4.89
20.06
30.14
0.68
4.15
18.17
32.09
0.69
Tot CA
Net FA
LT Inv
Other LT
763
349
0
111
1,140
631
50
223
1,195
701
50
223
62.39
28.54
0.00
9.08
55.77
30.87
2.45
10.91
55.09
32.32
2.31
10.28
1,223
2,044
2,169
100.0
100.0
100.0
Tot Assets
6-62
19X1
Common-Size (%)
6-63
19X1
19X2
19X3
Common-Size (%)
19X1
19X2
19X3
Note Pay
Acct Pay
Accr Tax
Other Accr
290
81
13
15
295
94
16
100
290
94
16
100
23.71
6.62
1.06
1.23
14.43
4.60
0.78
4.89
13.37
4.33
0.74
4.61
Tot CL
LT Debt
Equity
399
150
674
505
453
1,086
500
530
1,139
32.62
12.26
55.11
24.71
22.16
53.13
23.05
24.44
52.51
Tot L+E
1,223
2,044
2,169
100.0
100.0
100.0
19X2
19X3
Common-Size (%)
19X1
19X2
19X3
1,235
849
2,106
1,501
2,211
1,599
100.0
68.7
100.0
71.3
100.0
72.3
Gross Profit
Adm.
386
180
605
383
612
402
31.3
14.6
28.7
18.2
27.7
18.2
EBIT
Int Exp
206
20
222
51
210
59
16.7
1.6
10.5
2.4
9.5
2.7
EBT
186
171
151
15.1
8.1
6.8
EAT
112
103
91
9.1
4.9
4.1
Cash Div
50
50
50
4.0
2.4
2.3
6-64
Index Analyses
An analysis of percentage financial
statements where all balance sheet
or income statement figures for a
base year equal 100.0 (percent) and
subsequent financial statement
items are expressed as percentages
of their values in the base year.
6-65
Basket Wonders
Indexed Balance Sheets
Regular (thousands of $)
Assets
19X2
19X3
19X1
19X2
19X3
Cash
AR
Inv
Other CA
148
283
322
10
100
410
616
14
90
394
696
15
100.0
100.0
100.0
100.0
67.6
144.9
191.3
140.0
60.8
139.2
216.1
150.0
Tot CA
Net FA
LT Inv
Other LT
763
349
0
111
1,140
631
50
223
1,195
701
50
223
100.0
100.0
100.0
100.0
149.4
180.8
inf.
200.9
156.6
200.9
inf.
200.9
1,223
2,044
2,169
100.0
167.1
177.4
Tot Assets
6-66
19X1
Indexed (%)
Basket Wonders
Indexed Balance Sheets
Regular (thousands of $)
Liab+Equity
6-67
19X1
19X2
19X3
Indexed (%)
19X1
19X2
19X3
Note Pay
Acct Pay
Accr Tax
Other Accr
290
81
13
15
295
94
16
100
290
94
16
100
100.0
100.0
100.0
100.0
101.7
116.0
123.1
666.7
100.0
116.0
123.1
666.7
Tot CL
LT Debt
Equity
399
150
674
505
453
1,086
500
530
1,139
100.0
100.0
100.0
126.6
302.0
161.1
125.3
353.3
169.0
Tot L+E
1,223
2,044
2,169
100.0
167.1
177.4
19X2
19X3
Indexed (%)
19X1
19X2
19X3
1,235
849
2,106
1,501
2,211
1,599
100.0
100.0
170.5
176.8
179.0
188.3
Gross Profit
Adm.
386
180
605
383
612
402
100.0
100.0
156.7
212.8
158.5
223.3
EBIT
Int Exp
206
20
222
51
210
59
100.0
100.0
107.8
255.0
101.9
295.0
EBT
186
171
151
100.0
91.9
81.2
EAT
112
103
91
100.0
92.0
81.3
Cash Div
50
50
50
100.0
100.0
100.0
6-68