Sie sind auf Seite 1von 36

Accounting

Principles
Second Canadian Edition
Weygandt · Kieso · Kimmel · Trenholm

Prepared by:
Carole Bowman, Sheridan College
CHAPTER

19

FINANCIAL STATEMENT
ANALYSIS
BASICS OF
FINANCIAL STATEMENT ANALYSIS

• Analysing financial statements involves


evaluating three characteristics of a
company:
1. its liquidity
2. its profitability
3. its solvency
COMPARATIVE ANALYSIS

• Three types of
comparisons:
– Intracompany basis
– Intercompany basis
– Industry averages
COMPARATIVE ANALYSIS

• Three tools:
– Horizontal analysis
– Vertical analysis
– Ratio analysis
HORIZONTAL ANALYSIS

Change Current year amount — Base year amount


since base
———————————————————————
period
Base year amount

ANY COMPANY INC.


Assumed Net Sales
For the Year Ended December 31 (in millions)
2003 2002 2001 2000 1999
$ 6,562.8 $ 6,295.4 $ 6,190.6 $ 5,786.6 $ 5,181.4
127% 121% 119% 112% 100%
VERTICAL ANALYSIS

• Expresses each item in a financial statement as a


percent of a base amount (total assets or net
sales)
ANY COMPANY, INC.
Condensed Balance Sheets (Partial)
December 31 (in millions)

2002 2001 .
Assets Amount Percent Amount Percent
Current assets $1,496.5 29.6 $1,467.7 30.1
Capital assets 2,888.8 57.2 2,733.3 56.9
Other assets 666.2 13.2 636.6 13.0
Total assets $5,051.5 100.0% $4,837.6 100.0%
RATIO ANALYSIS

Liquidity Ratios
Measure short-term ability
of the enterprise to pay its
maturing obligations and to
meet unexpected needs for
cash.
Profitability Ratios
Revenues Expenses

- = Net
Income
Measure the income or
operating success of an
enterprise for a given period
of time.
Since 1892

Solvency Ratios
XYZ Measure the ability of the
Co. enterprise to survive over a
long period of time.
LIQUIDITY RATIOS

• Current ratio
• Acid test ratio
• Cash current debt coverage ratio
• Receivables turnover
• Collection period
• Inventory turnover
• Days sales in inventory
CURRENT RATIO

• Measures short-term debt-paying ability

Current ratio =
Current assets
Current liabilities

(Discussed in Chapter 4)
ACID TEST RATIO

• Measures immediate short-term debt-


paying ability

Acid test ratio =


Cash + temporary investments + net receivables
Current liabilities

(Discussed in Chapter 9)
CASH CURRENT DEBT
COVERAGE RATIO

• Measures short-term debt-paying ability


(cash basis)

Cash current debt coverage ratio =


Cash provided by operating activities
Average current liabilities

(Discussed in Chapter 18)


RECEIVABLES TURNOVER

• Measures liquidity of receivables

Receivables turnover =
Net credit sales
Average net receivables

(Discussed in Chapter 9)
COLLECTION PERIOD

• Measures number of days receivables


are outstanding

Collection period =
365 days
Receivables turnover

(Discussed in Chapter 9)
INVENTORY TURNOVER

• Measures liquidity of inventory

Inventory turnover =
Cost of goods sold
Average inventory

(Discussed in Chapter 5)
DAYS SALES IN INVENTORY

• Measures number of days inventory is


on hand

Days in inventory =
365 days
Inventory turnover

(Discussed in Chapter 5)
PROFITABILITY RATIOS

• Profit margin • Book value per share


• Gross profit margin • Cash flow per share
• Cash return on sales • Earnings per share (EPS)
• Asset turnover • Price-earnings (PE) ratio
• Return on assets • Payout ratio
• Return on common • Dividend yield
shareholders’ equity
PROFIT MARGIN

• Measures net income generated by each


dollar of sales

Profit margin =
Net income
Net sales

(Discussed in Chapter 5)
GROSS PROFIT MARGIN

• Measures margin between selling price


and cost of goods sold generated by each
dollar of sales

Gross profit margin =


Gross profit
Net sales

(Discussed in Chapter 5)
CASH RETURN ON SALES

• Measures net cash flow generated by


each dollar of sales

Cash return on sales =


Net cash provided by operating activities
Net sales

(Discussed in Chapter 18)


ASSET TURNOVER

• Measures how efficiently assets are used


to generate sales

Asset turnover =
Net sales
Average total assets

(Discussed in Chapter 10)


RETURN ON ASSETS

• Measures overall profitability of assets

Return on assets =
Net income
Average total assets

(Discussed in Chapter 10)


RETURN ON COMMON
SHAREHOLDERS’ EQUITY

• Measures profitability of common


shareholders’ investment

Return on common shareholders’ equity =


Net income
Average common shareholders’ equity

(Discussed in Chapter 14)


BOOK VALUE PER SHARE

• Measures the equity (net assets) per


common share

Book value per share =


Common shareholders’ equity
Number of common shares

(Discussed in Chapter 14)


CASH FLOW PER SHARE

• Measures the net cash flow per common


share

Cash flow per share =


Net cash provided by all activities
Number of common shares

(Discussed in Chapter 18)


EARNINGS PER SHARE (EPS)

• Measures net income earned on each


common share

Earnings per share =


Net income
Number of common shares

(Discussed in Chapter 15)


PRICE-EARNINGS (PE) RATIO

• Measures relationship between market


price per share and earnings per share

Price-earnings ratio =
Share price
Earnings per share

(Discussed in Chapter 15)


PAYOUT RATIO

• Measures % of earnings distributed in


the form of cash dividends

Payout ratio =
Cash dividends
Net income

(Discussed in Chapter 15)


DIVIDEND YIELD

• Measures rate of return earned from


dividends

Dividend yield =
Cash dividends per share
Share price

(Discussed in Chapter 15)


SOLVENCY RATIOS

• Debt to total assets


• Interest coverage
• Cash interest coverage
• Cash total debt coverage
DEBT TO TOTAL ASSETS

• Measures % of total assets provided by


creditors

Debt to total assets =


Total liabilities
Total assets

(Discussed in Chapter 16)


INTEREST COVERAGE

• Measures ability to meet interest


payments as they come due

Interest coverage =
Income before interest expense
and income tax expense (EBIT)
Interest expense

(Discussed in Chapter 16)


CASH INTEREST COVERAGE

• Measures cash available to meet interest


payments as they come due (cash basis)

Cash interest coverage =


Income before interest expense, income tax
expense, and amortization expense (EBITDA)
Interest expense

(Discussed in Chapter 16)


CASH TOTAL DEBT COVERAGE

• Measures long-term debt-paying ability


(cash basis)

Cash total debt coverage ratio =


Net cash provided by operating activities
Average total liabilities

(Discussed in Chapter 18)


LIMITATIONS OF FINANCIAL
ANALYSIS

• Estimates
• Historical cost
• Alternative
accounting
methods
• Atypical data
• Diversification
COPYRIGHT

Copyright © 2002 John Wiley & Sons Canada, Ltd. All rights reserved.
Reproduction or translation of this work beyond that permitted by
CANCOPY (Canadian Reprography Collective) is unlawful. Request for
further information should be addressed to the Permissions Department,
John Wiley & Sons Canada, Ltd. The purchaser may make back-up copies
for his / her own use only and not for distribution or resale. The author and
the publisher assume no responsibility for errors, omissions, or damages,
caused by the use of these programs or from the use of the information
contained herein.

Das könnte Ihnen auch gefallen