Financial Statement Analysis

Slides:

Advertisements

Similar presentations

Chapter 3 Working with Financial Statements

Advertisements

Chapter 3 Working With Financial Statements

C15- 1 Learning Objectives Power Notes 1.Basic Analytical Procedures 2.Solvency Analysis 3.Profitability Analysis 4.Summary of Analytical Measures 5.Corporate.

July 8, Financial Ratio Analysis Financial ratios combine different financial parameters. They are based on the financial data drawn from the balance.

(using financial statements)

Essentials of Investments © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Fourth Edition Irwin / McGraw-Hill Bodie Kane Marcus 1 Chapter 14.

CF Winter Winter Corporate Finance 1.Capital Budgeting  Long-term investments which ones? 2.Capital Structure  Long-term financing.

Foundations of Business

Fall-02 Investments Zvi Wiener tel: Financial Statement Analysis BKM.

1 Corporate Finance Interview Prep - Accounting Mark Pacyna / Manoj Ramnani VP’s for Corporate Finance Ross Business School Finance Club.

BAGIAN 3 The Analysis of Financial Statements. 2(C) 2004 Prentice Hall, Inc. The Analysis of Financial Statements This chapter will develop tools and.

McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. Financial Statement Analysis CHAPTER 14.

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.

Financial Statement Analysis

1 Analysis of Financial Statements Timothy R. Mayes, Ph.D. FIN 3300: Chapter 3.

Chapter Thirteen Financial Statement Analysis Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin.

1 FINANCIAL STATEMENT ANALYSIS CHAPTER 13. Fundamental Analysis Finance (chapter 12): Valuation techniques  Dividend discount model, P/E ratio  Need.

McGraw-Hill/Irwin Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter Macroeconomic and Industry Analysis.

Parts of a Financial Statement 1.Statement of Income 2.Balance Sheet 3.Statement of Cash Flow 4.Statement of Stockholders’ Equity.

Financial Statements Ratio Analysis

Copyright © 2006 McGraw Hill Ryerson Limited17-1 prepared by: Sujata Madan McGill University Fundamentals of Corporate Finance Third Canadian Edition.

Analyzing Financial Statements

Key Financial Ratios 1. Profitability Ratios Key ratios – Return on shareholders’ equity (ROE) – Return on assets (ROA) – Return on sales (ROS) – Gross.

Evaluating a Firm’s Financial Performance , Prentice Hall, Inc.

WORKING WITH FINANCIAL STATEMENTS Chapter 3. Key Concepts and Skills  Understand sources and uses of cash and the Statement of Cash Flows  Know how.

Chapter 18-1 LO 5 Identify and compute ratios used in analyzing a firm’s liquidity, profitability, and solvency. Ratio Analysis Illustration.

EVALUATING FINANCIAL PERFORMANCE

CHAPTER 19 Investments Financial Statement Analysis Slides by Richard D. Johnson Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved.

Parts of a Financial Statement 1.Statement of Income 2.Balance Sheet 3.Statement of Cash Flow 4.Statement of Stockholders’ Equity.

Ratio Analysis FWhy Conduct Ratio Analysis?  FRatios Are Used To Evaluate:  FClassifications of Ratios:

Evaluating a Firm’s Financial Performance Evaluating a Firm’s Financial Performance , Prentice Hall, Inc.

Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Financial Statement Analysis K R Subramanyam John J Wild.

Chapter 2 Financial Ratio Analysis. 2-2 Example 2.1 Problem  Rylan Enterprises has 5 million shares outstanding.  The market price per share is $22.

Types of Ratio Analysis FTime Series, Historical, or Trend Analysis  Example: FCross-Sectional or Peer Comparison Analysis  Example:  Sources of Comparative.

Chapter 2 Introduction to Financial Statement Analysis.

Th 9 ©The McGraw-Hill Companies, Inc Foundations of Financial Management E D I T I O N N I N T H Irwin/McGraw-Hill Block Hirt 5 C H A P T E R FIVE.

©2012 McGraw-Hill Ryerson Limited 1 of 34 Learning Objectives 1.Calculate 13 financial ratios that measure profitability, asset utilization, liquidity.

Fourth Edition 1 Financial Statement Analysis. Fourth Edition 2 Outline 1.Financial statements 1.Income statement and margin analysis 2.Ratio analysis.

Ch. 4 - Evaluating a Firm’s Financial Performance , Prentice Hall, Inc.

Chapter 2 Analysis of Financial Statements. Financial Ratio Analysis Are our decisions maximizing shareholder wealth?

V. STOCKS. L. RATIO ANALYSIS 1.Ratios That Measure Liquidity (the firm’s ability to convert assets into cash) a.Current Ratio = Current Assets Current.

Summary Of Previous Lecture  basic financial statements and their contents.  financial statement analysis and its importance to the firm and to outside.

1 Chapter 03 Analyzing Financial Statements McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

McGraw-Hill/Irwin Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 19 Financial Statement Analysis.

Slide 1 Evaluating a Firm’s Financial Performance Goals of evaluating firm performance: Are our decisions maximizing shareholder wealth? We will want to.

FINANCIAL STATEMENTS. Financial Health of Firm Firms produce good and services by using assets Financial condition of firm’s Assets Financing of these.

Chapter 3 - Evaluating a Firm’s Financial Performance  2005, Pearson Prentice Hall.

Bodie Kane Marcus Perrakis RyanINVESTMENTS, Fourth Canadian Edition Copyright © McGraw-Hill Ryerson Limited, 2003 Slide 15-1 Chapter 15.

Ch. 3 - Evaluating a Firm’s Financial Performance and Measuring Cash Flow  1999, Prentice Hall, Inc.

Chapter 3 Evaluation of Financial Performance © 2001 South-Western College Publishing.

McGraw-Hill/Irwin © 2007 The McGraw-Hill Companies, Inc., All Rights Reserved. Financial Statement Analysis CHAPTER 13.

 The McGraw-Hill Companies, Inc., 1999 INVESTMENTS Fourth Edition Bodie Kane Marcus Irwin/McGraw-Hill 19-1 Financial Statement Analysis Chapter 19.

Rivanna Investments: Intro to Equity Research. Rivanna Investments First step is to gather information Financial statement and reports (EDGAR)

FINANCIAL STATEMENTS.

Chapter 3 - Evaluating a Firm’s Financial Performance

Pre – MBA Program Accounting Ratios Nov 11, 2012.

Financial Statement Analysis

Financial Statement Analysis

Financial Statement Analysis

Financial Statement Analysis

Analysis and Interpretation of Financial Statements

Financial Statement Analysis

3 Chapter Financial Analysis.

Analysis of Financial Statements

Analysis of Financial Statements

Financial Analysis Quick ratio: ($22,000+ $41,500)/

Intro to Financial Management

5 Financial Analysis FIVE C H A P T E R Irwin/McGraw-Hill

FINANCIAL STATEMENT ANALYSIS

Presentation transcript:

Financial Statement Analysis Chapter 19 Financial Statement Analysis

Overview Purpose Tools Used Statements Ratio Analysis Limitations

Financial Statements Balance Sheet Income Statement Common Sized Trend or Indexed Income Statement Statement of Cash Flows

Ratio Analysis Purpose of Ratio Analysis Uses Use by External Analysts Trend analysis Comparative analysis Combination Use by External Analysts Important information for investment community Important for credit markets

Type of Financial Ratios Liquidity Ratios Activity or Mgmt Efficiency Ratios Leverage Ratios Profitability Ratios Market Price Ratios

Liquidity Ratios Current Ratio Current Assets Current Liabilities Quick Ratio Current Assets - Inventory

Activity or Management Efficiency Ratios Inventory Turnover Sales or Cost of Goods Sold Inventory Total Asset Turnover Sales Total Assets

Activity or Management Efficiency Ratios Average Collection Period Accounts Receivable Sales Per Day Days to Sell Inventory Inventory

Leverage Ratios Times Interest Earned Earnings Before Int. & Taxes Interest Expense Fixed Charge Coverage Ratios Lease Payments Principal Repayments Preferred Dividends

Leverage Ratios Debt to Assets Long Term Debt Assets Debt to Equity Shareholders Equity

Profitability Ratios Net Profit Margin % Net Income Sales Return on Assets Total Assets

Profitability Ratios Return on Equity Net Income Common Equity Operating Margin After Depr. Operating Profit Sales

Market Price Ratios Price to Earnings Market Price of Stock Earnings Market-to-Book-Value Book Value Per Share

Decomposition of ROE (1) x (2) x (3) x (4) x (5) ROE = Net Profit Pretax Profit x EBIT Sales Assets Equity (1) x (2) x (3) x (4) x (5) x Margin x Turnover x Leverage Tax Burden Interest

Comparability Problems Accounting Differences Inventory Valuation Depreciation Inflation International Accounting Conventions