财务会计学英文课件：ch12 Financial Statement Analysis

1、Chapter 12Financial Statement AnalysisPerform a horizontal analysis of financial statements2Copyright 2014 Pearson Education. Horizontal Analysis Study of percentage changes from year-to-year Two steps:1. Compute dollar amount of change2. Divide dollar amount of change by base-period amount3Copyrigh

2、t 2014 Pearson Education. Exercise 12-19ASensible Music CompanyComparative Income StatementsYears Ended December 31, 20X6 and 20X520X620X5$ Change% ChangeTotal revenue$852,000$912,000 ($60,000)(6.6%)Expenses: Cost of goods sold$402,000$408,000(6,000)(1.5%) Selling & genl expense232,000261,000(29

3、,000)(11.1%) Interest expense9,20010,500(1,300)(12.4%) Income tax expense83,00084,000(1,000)(1.2%)Total expenses726,200763,500(37,300)(4.9%) Net income$125,800$148,500(22,700) (15.3%)4Copyright 2014 Pearson Education. Trend Percentages Form of horizontal analysis Base year selected and set equal to

4、100% Amount of each following year stated as a percent of base5Copyright 2014 Pearson Education. Trend %Any yearBase yearPerform a vertical analysis of financial statements6Copyright 2014 Pearson Education. Vertical Analysis Shows relationship of a financial-statement item to its base For Income Sta

5、tement, total revenue is the base For Balance Sheet, total assets is the base7Copyright 2014 Pearson Education. Vertical analysis %Total revenueEach income statement itemBenchmarking Compares one entity to another Compare against Direct competitor in same industry, Peers in broader market, or Any ot

6、her “aspiration” entities Gives context to interpret data8Copyright 2014 Pearson Education. Prepare common-size financial statements9Copyright 2014 Pearson Education. Common-Size Statements Report only percentages No currency amounts Help in the comparison of different companies Financial results in

7、 terms of a common denominator Currency and size differences are eliminated10Copyright 2014 Pearson Education. Compute the standard financial ratios11Copyright 2014 Pearson Education. Financial RatiosCopyright 2014 Pearson Education. 12Ability to pay current liabilitiesCash conversion cycleAbility t

8、o pay long-term debtProfitabilityAnalyze shares as an investmentAbility to Pay Current LiabilitiesCopyright 2014 Pearson Education. 13Working capitalCurrent ratioAcid-test ratioWorking Capital & Current Ratio14Working capitalCurrent assetsCurrent liabilitiesCurrent ratioCurrent assetsCurrent lia

9、bilitiesCopyright 2014 Pearson Education. Acid-Test Ratio15Cash + Short-term investments + Net current receivablesCurrent liabilitiesCopyright 2014 Pearson Education. Ability to Sell Inventory and Collect Receivables Copyright 2014 Pearson Education. 16Inventory turnoverAccounts receivable turnoverD

10、ays-sales-in- receivablesInventory TurnoverCopyright 2014 Pearson Education. 17Cost of goods soldAverage inventory(Beginning inventory + Ending inventory)/2)Inventory Resident Period = 365/Inventory TurnoverAccounts Receivable TurnoverCopyright 2014 Pearson Education. 18Net salesAverage net accounts

11、 receivable(Beginning net receivables + Ending net receivables)/2)Receivables Collection Period = 365/Receivables TurnoverAccounts Payables TurnoverCopyright 2014 Pearson Education. 19Cost of goods soldAverage accounts payables(Beginning payables+ Ending payables)/2)Payables Outstanding Period = 365

12、/Payables TurnoverCash Conversion CycleCopyright 2014 Pearson Education. 20Receivables collection periodInventory resident periodPayables outstanding periodExercise 12-21ACopyright 2014 Pearson Education. 21Current yearPreceding yearBalance Sheet: Cash$26,00032,000 Short-term investments14,00020,000

13、 Net receivables50,00073,000 Inventory94,00076,000 Prepaid expenses9,0008,000 Total current assets193,000209,000 Total current liabilities129,00096,000Income Statement: Net credit sales$490,000 Cost of goods sold274,000Exercise 12-21A22Current ratioCurrent assetsCurrent liabilities$193,000$129,0001.

14、50Copyright 2014 Pearson Education. Exercise 12-21A23Cash + Short-term investments + Net current receivablesCurrent liabilitiesAcid- test ratio = $26,000 +14,000 + 50,000$129,000$90,000.70Copyright 2014 Pearson Education. Exercise12-21ACopyright 2014 Pearson Education. 24Cost of goods soldAverage in

15、ventory(Beginning inventory + Ending Inventory)/2)$274,000(76,000 +94,000)/2)$85,000Inventory turnover = 3.22Exercise 12-21ACopyright 2014 Pearson Education. 25Net salesAverage net accounts receivable(Beginning net receivables + Ending net receivables)/2)Accounts receivable turnover =$490,000($73,00

16、0 + 50,000)/2$61,5007.97Exercise 12-21ACopyright 2014 Pearson Education. 26One days salesNet sales365 days$490,000Receivables Collection Period1.365 days$1,342.47Exercise 12-21ACopyright 2014 Pearson Education. 27Days sales in average accounts receivableAverage net accounts receivableOne days salesR

17、eceivables Collection Period2.$61,500($73,000 + 50,000)/2One days sales$1,342.4746 daysMeasuring Ability to Pay DebtsCopyright 2014 Pearson Education. 28Debt ratioTimes-interest-earnedDebt ratioCopyright 2014 Pearson Education. 29Total liabilitiesTotal assetsTimes-Interest-EarnedCopyright 2014 Pears

18、on Education. 30Income from operationsInterest expenseMeasuring ProfitabilityCopyright 2014 Pearson Education. 31Return on salesReturn on assetsReturn on equityRate of Return on SalesCopyright 2014 Pearson Education. 32Net incomeNet salesRate of Return on Total AssetsCopyright 2014 Pearson Education

19、. 33Net incomeAverage total assetsRate of Return on Ordinary Shareholders EquityCopyright 2014 Pearson Education. 34Net income Preference dividendsAverage ordinary shareholders equityLeverage Borrowing at a lower rate than invested funds earn Increases profits during good times Compounds losses duri

20、ng bad times35Copyright 2014 Pearson Education. Analyzing Share InvestmentsPrice/Earnings ratioDividend yieldBook valueEarnings per share36Copyright 2014 Pearson Education. Earnings per ShareCopyright 2014 Pearson Education. 37Net income Preference dividendsWeighted average number of ordinary shares

21、 outstandingPrice/Earnings RatioCopyright 2014 Pearson Education. 38Market price per share of ordinary sharesEarnings per shareDividend YieldCopyright 2014 Pearson Education. 39Dividend per share of ordinary sharesMarket price per share of ordinary sharesBook ValueCopyright 2014 Pearson Education. 4

22、0Total shareholders equityPreference equityNumber of ordinary shares outstandingMeasure the economic value added by operations41Copyright 2014 Pearson Education. Economic Value Added (EVA ) Combines accounting and finance data Measures if operations have increased shareholder wealth Positive EVA suggests increase in wealth42Copyright 2014 Pearson Education. Net income