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Mr. : Mohammed Bisharah
Financial Statement Analysis
Financial Statement .1
Financial Ratio .2
Common Size Analysis .3
Changing Prices .4
International Consideration .5
Income Statement
Balance Sheet
The Statement of Retained Earning
The Statement of Cash Flow
: The Income Statement

.
.
Matching Principle
.
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2004 , 31. 2005 , 31 ) ( $000
21580 23622
11540 11824
------- -------
10040 11798
6543 7669
1833 2073
------ -------
1664 2056
731 675
)(14 )(14
------- ------
947 1395
338 434
----- ------
609 961
=== ====
6235451 6111875 ) (
$0.10 $0.16
$2.00 $2.43

. .

Financial Statement : :
Balance Sheet Statement
.
. .
.
Asset- Liabilities = Shareholders =

Equity

2004 , 31. 2005 , 31 ) ( $000
2004 2005
1714 2300
400 0
4435 3891
327 237
3417 4128
306 346
------- -------
10600 10903
22426 23085
------- -------
33026 33988
===== =====

2257 3199
952 937
------- ------
3209 4136
5992 5125
2248 2573
------ ------
11449 11835
------ ------
9414 8670
678 978
11545 12506
------- ------
21637 22154
------- -------
33086 33988
===== =====
) Net Working Capital ( NWC

6767 = 4136 -10903 = 2005
= 7351 =3209 -10560 2004
positive 12

Market Value vs Book

Value

.
.
.
) (
.
.
.
.
.1 ) %35 (
.2 ) 1.5 (
.3 ) 67 (
Cross Sectional Analysis
Time series Analysis
Combined Analysis

.
.
.1
.2
.3
.4

. Intention

.
2.64 = 4136 10903 2005
3.30 = 3209 10060 2004

Quick Ratio
= ) (
)1.64 = 4136 ( 4128 -10903 2005
) 2.24 = 3209 (3417 -10060 2004

. %100

= +
0.56 = 41362300 2005
0.66 = 3209 2114 2004
NWC = NWC/ Total Asset s

=
Interval Measure = Current Asset / Average Daily operation Cost
Average Daily Operation Cost = ( COGS +SGA) / 365
= + 365
Ratio Analysis : Leverage Ratio :
:
. :

:

:
D/E
D/E= long Term Debt/

Shareholder Equity
0.27 22154 937+5125 2005
0.32 21636 952+5992 2004
) ( /
Total Debt Ratio = Total Asset- Total Equity
--------------------------
Total Asset
= 0.35 = 33988 22154-33988 2005
= 0.35 = 33086 21637-33086 2004
Equity Multiplier
Total Asset
Equity Multiplier = ------------
Total Equity

Long Term Debt /( Long Term ) + (

) debt + Total Equity
Times Interest Earned
Times Interest Earned = EBIT/ INTEREST
Cash Coverage = EBIT+ Depreciation / Interest
Financial :
Analysis : Activity Ration
Inventory turnover = /
= COGS/Inventory
Average Age Of Inventory
Average age of = /365

Inventory = 365/ Inventory Turnover

.
COGS
2005 2004 2005
2005
2.86 = 4128 11824 2005
3.13 = 2/(3417+4128) 11824 2002
2005
127 = 2.86 365 2005
116 = 3.13 365
Receivable Turnover
= Receivable Turnover =
Sales /account Receivable
= /365
Days Sales in Receivable = 365/ Receivable Turnover
2005
6.07 = 3891 23622 2005
5.67 = 2/(4435+3892) 23622 2005
60 = 6.07 365 2005
64 = 5.67 365 2005
) (

Payable Turnover
Payable Turnover = COGS/ =

Account Payable
= Average Payment Period = /365

365/ Payable Turnover
3.70 = 3199 11824 2005
4.33 = 2/(2257+3199) 11824 2005
99 = 3.70 365

85 = 4.33 365

) (

NWC Turnover = Sales /NWC

Fixed Asset Turnover = Sales / Fixed Asset
Total Asset Turnover = Sales / Total Asset
; Financial Analysis :
Profitability Ratio
Profit Margin
profit Margin = Net Income =

/ Sales
%4.07 = 23622 961 2005
%2.82 = 21580 609 2004
Gross Profit Margin = Gross Income / Sales
2005 11798/23622 = 49.9%
2004 11540/21580 = 46.5%
Operation Profit
Margin
Operating Profit Margin = EBIT
Operating Profit Margin for Alpha Co Was
2005 2056/23622 =8.7 %
2004 1644/21580 =7.7%
Return on Asset (ROA)
ROA = Net Income /Total Asset
/ =
%2.83 = 33988/961 2005
% 1.84= 33086/609 2004
Return on Equity (ROE)
ROE = Net Income / Equity
= /
% 4.34 = 22154/961 2005
% 2.81 = 21637/609 2004
Market Value Ratio
Earning Per Share
E/P= Stock price / /

Earning per Share
15.4 = 0.16 2.43 2005
20.48= 0.10 2.00 2004
E/P . 15 19 40
E/P 19 %3
16 = 3-19
Market to Book Value
ME/BE ratio = Stock Price /Book Equity Per Share
Where Book Equity per Share mean total Equity as it appear in the Balance sheet
Divided by the Share Outstanding
0.67 = (22154+6112)2.43 2005
0.58 =(216376235)2.00 2004
Market to Book Value(ME/BE)
Dividend Pay out Ratio
Dividend Pay out Ratio = Common Share Dividend / Earning Available for
Common Shares
Topin Q Ratio = Market Value of debt and Equity / Replacement Cost of Asset
DUPONT RATIO
ROC = NET INCOME / NET ASSET
= Net Income /Net asset Asset/Asset Total asset/Total Asset
= Net Income / Sales Sales /Total Asset Total Asset/ Total Equity
= Profit Margin Asset Turnover Equity Multiplier

( Ratio for ROA )
The Return of Capital
The Calculation of Return of Capital Using the Method and DUPONT I is like This
ROC = 4.34%
NI/Sales Sales/TA TA/TE
= 961/23622 23622/33988 33988/22154

= 4.068 .70% 1.53
= 4.43%
Common Size Analysis
.1
.2

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www.infotechaccountants.

Financial Statement Analysis

: The Income Statement

Asset- Liabilities = Shareholders =

) Net Working Capital ( NWC

6767 = 4136 -10903 = 2005

= 7351 =3209 -10560 2004

Market Value vs Book

Cross Sectional Analysis

Time series Analysis

2.64 = 4136 10903 2005

3.30 = 3209 10060 2004

)1.64 = 4136 ( 4128 -10903 2005

) 2.24 = 3209 (3417 -10060 2004

0.56 = 41362300 2005

0.66 = 3209 2114 2004

NWC = NWC/ Total Asset s

Average Daily Operation Cost = ( COGS +SGA) / 365

Ratio Analysis : Leverage Ratio :

D/E= long Term Debt/

0.27 22154 937+5125 2005

0.32 21636 952+5992 2004

= 0.35 = 33988 22154-33988 2005

= 0.35 = 33086 21637-33086 2004

Long Term Debt /( Long Term ) + (

Times Interest Earned

Times Interest Earned = EBIT/ INTEREST

Cash Coverage = EBIT+ Depreciation / Interest

Average Age Of Inventory

Average age of = /365

2.86 = 4128 11824 2005

3.13 = 2/(3417+4128) 11824 2002

127 = 2.86 365 2005

116 = 3.13 365

6.07 = 3891 23622 2005

5.67 = 2/(4435+3892) 23622 2005

60 = 6.07 365 2005

64 = 5.67 365 2005

Payable Turnover = COGS/ =

= Average Payment Period = /365

3.70 = 3199 11824 2005

4.33 = 2/(2257+3199) 11824 2005

NWC Turnover = Sales /NWC

profit Margin = Net Income =

%4.07 = 23622 961 2005

%2.82 = 21580 609 2004

Gross Profit Margin = Gross Income / Sales

2005 11798/23622 = 49.9%

2004 11540/21580 = 46.5%

Operating Profit Margin = EBIT

Operating Profit Margin for Alpha Co Was

2005 2056/23622 =8.7 %

2004 1644/21580 =7.7%

Return on Asset (ROA)

ROA = Net Income /Total Asset

%2.83 = 33988/961 2005

% 1.84= 33086/609 2004

Return on Equity (ROE)

ROE = Net Income / Equity

% 4.34 = 22154/961 2005

% 2.81 = 21637/609 2004

Market Value Ratio

Earning Per Share