The Analysis of Financial

Statements
• The Use Of Financial Ratios
• Analyzing Liquidity
• Analyzing Activity
• Analyzing Debt
• Analyzing Profitability
• A Complete Ratio Analysis
 The Analysis of Financial
2 Statements
 THE USE OF FINANCIAL RATIOS
– Financial Ratio are used as a relative measure
that facilitates the evaluation of efficiency or
condition of a particular aspect of a firm's
operations and status
– Ratio Analysis involves methods of
calculating and interpreting financial ratios in
order to assess a firm's performance and status
 TCC Financial Analysis

• Return on Assets = Net profit/Total Assets

• 5,048,005/197,267,082
• = .025
• Return on Assets = Gross profit/Total Assets
• 27,365,893/197,082 = .14 of which .12 represents operating
expenses

•
 TCC Financial Analysis
• Ratio of Operating Expenses to Operating
Income

• Operating Expenses/Operating Income

• 22,317,888/27,365,893 = .82
 TCC Financial Ratios
• Net profit ratio = net profit /gross income
• 5,048,005/27,365,893 = .18
• Average Receivable Turnover = gross
receipts/receivables, end
• 21,497,163/23,414,530 = .93 means that over one
year accounts receivables are significant enough
• Average collection period = A/R Turnover/360 = .
0026 days