Professional Documents
Culture Documents
Analysis
Cris John Dequiña
Grace Famarangco
Jolyn Mae Ramos
FINANCIAL ANALYSIS
• To diagnose the current and past
financial condition of the firm to
give some clues about its future
condition.
• Is a way by which various groups
would know the financial condition
of the firm.
• This is determined through single-
period analysis and/or comparative
or trend analysis.
SINGLE-PERIOD ANALYSIS
𝐈𝐧𝐯𝐞𝐧𝐭𝐨𝐫𝐲
Inventory to net working capital 𝐑𝐚𝐭𝐢𝐨 =
𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐀𝐬𝐬𝐞𝐭𝐬 − 𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐋𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬
Activity Ratio: Sales to Net Worth Ratio:
Ratios that are used to measure Ratio of net sales to owner’s
how effectively the firm employs equity represents the turnover of
the resources at its command. owner’s equity.
Four classifications of Activity N𝐞𝐭 𝐬𝐚𝐥𝐞𝐬 𝐩𝐞𝐫 𝐩𝐞𝐬𝐨 𝐨𝐟 𝐎𝐄 =
𝐍𝐞𝐭 𝐒𝐚𝐥𝐞𝐬
𝐓𝐚𝐧𝐠𝐢𝐥𝐞 𝐎𝐰𝐧𝐞𝐫𝐬′ 𝐄𝐪𝐮𝐢𝐭𝐲
Ratios:
𝐏𝟖𝟕𝟐,𝟕𝟎𝟎,𝟎𝟎𝟎
1. Sales to receivable ratio N𝐞𝐭 𝐬𝐚𝐥𝐞𝐬 𝐩𝐞𝐫 𝐩𝐞𝐬𝐨 𝐨𝐟 𝐎𝐄 = 𝐏𝟐𝟖𝟏,𝟒𝟎𝟎,𝟎𝟎𝟎