Investment Planning

&
Analysis

Azriel Varrand Khalevi. 5019211026. Maritime

Economic. Class G. 5 Semester. 2023. Week 7
Assignment. 12 October 2023.
 Financial
Analysis
Financial analysis is like investigating a company's money situation,
both now and in the future. It's a process where we choose, look at, and
understand financial information and other stuff that's important. By
doing this, we can figure out how well a company is doing and how it
might do in the future.
 Financial
Market Analysis Economic
Data Data

Financial
Disclosur
 Horizontal common-
size analysis
This is like a growth comparison. We pick one
year as the starting point, and then we show all
the other years as a percentage of that one. It
COMMON- helps us see how different things grow over
time
SIZE
ANALYSIS Vertical common-
size analysis
This one is about comparing items to the total.
For balance sheets, the total is all the assets,
and for income statements, it's all the money a
company made (revenues or sales). We then
show each item as a percentage of the total.
This helps us see where the money is going or
coming from in a single year."
Financial
ratio analysis

Financial ratio analysis is like a special tool we use to check

how well a company is doing financially. We do this by doing
some math with numbers from the company's financial
reports. These numbers help us understand different things
about the company's money.

For example, we can figure out if the company has enough

money to pay its bills or if it's making a good profit. We use
these ratios to get a clear picture of how the company is
running. It's like looking under the hood of a car to see how
well the engine is working.
 FINANCIAL
RATIO
ANALYSIS

ACTIVITY RATIOS LIQUIDITY SOLVENCY PROFITABILITY

RATIOS RATIOS RATIOS
Activity
Ratio
Activity ratios are like detective tools for checking how good a company is at using its
stuff and running its business. We use these ratios to see if the company is doing
things efficiently.

Imagine you have a toy. If you play with it a lot and it doesn't just sit there, that's good.
These ratios help us figure out if a company's toys, which are its assets, are being used
well.

For example, we can check how quickly they sell their toys (inventory turnover) or
how fast they collect money from their friends (accounts receivable turnover). These
ratios help us understand if the company is running smoothly and making the most of
what they have
Liquidity
Ratios
Current Ratio: Compares current assets to
current liabilities to measure a company's
short-term solvency.
Quick Ratio (Acid-Test Ratio): Similar to the
current ratio but excludes inventory to
provide a more conservative measure of
liquidity.

Solvency
Ratios
Debt to Equity Ratio: Indicates the
proportion of debt used to finance the
company's assets.
Interest Coverage Ratio: Measures a
company's ability to cover interest
payments with its earnings.
Profitability Ratios
Profitability ratios are like scorecards for a company's money-making skills. They help us
understand how good a company is at making profits compared to its sales, investments, and the
money provided by owners. Think of it like a game – we want to see if the company is winning.
There are different ratios that tell us different things. For example, the 'Gross Profit Margin' ratio
helps us know how much money the company makes from selling its stuff after covering the cost
of making it. The 'Net Profit Margin' ratio shows how much money is left as profit after paying for
everything. These ratios help us figure out if the company is doing well financially and making
money for its owners.
S
H
A
R Book value per
$1.00
There is $1 of equity, per the books, for every
share share of stock
E
H The market price of the stock is 16.67 times earnings
P/E 16.67
O per share.

L
Dividends per
D share
$0.12 The dividends paid per share of stock

E
R Dividend payout
40%
The proportion of earnings paid out in the form of
ratio dividends.

R The proportion of earnings retained by the

Plowback ratio 60%
A company.

T
I
O
S