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Manacc Presentation
Manacc Presentation
ANALYSIS
Viability
Stability
Profitability
Helps forecast
future performance
PROFITABILITY
PARAMETERS
LIQUIDITY STABILITY
Financial Analysis enables users
to :
Evaluate financial
condition of the company.
Prioritise tasks for the
future.
Monitor achieved results.
Detect potential threats.
Horizontal Analysis also referred as Comparative Financial
Statement Analysis. Review of changes in
individual account balances on a year-to-
year or multiyear basis.
Year to year change analysis
Vertical Analysis also referred as Common-Size Financial
Statement Analysis.
RATIO
ANALYSIS
Ratios are fractions or percentages
computed by dividing one account or
line item amount by another
Past History
- Comparing the value of ratio
over time
- Allows trends to be assessed
- The company’s management can
use this information to take
corrective actions
Leverage
Before Interest
+ Total Liabilities
Taxes Expense
Total Assets
Ratios
Interest
Expense
Uses the income statement to Measures the degree of
asses a company’s ability to
service its debts
protection afforded creditors in
case of insolvency
Can help an individual
to evaluate a
company’s debt-
Debt-to-Equity Ratio
carrying ability
Total Liabilities
Total Stockholders’ Equity
Finished
Goods or Merchandise Inventory
Turnover Ratio
Formula:
generally computed as:
Sales = ____ x
Inventory
Formula:
Net Credit Sales = ____ Days
Average Accounts Receivable
ASSET MANAGEMENT RATIOS
Average Collection Period Ratio
Formula:
365 Days = ___ Days
Receivables Turnover Ratio
ASSET MANAGEMENT RATIOS
Fixed Assets Turnover Ratio
Formula:
Sales = ____ x
Net Fixed Assets
ASSET MANAGEMENT RATIOS
Total Capital Turnover Ratio
Formula:
Sales
Total Capital
ASSET MANAGEMENT RATIOS
Total Assets Turnover Ratio
Formula:
Sales = ____ x
Total Assets
COST MANAGEMENT
RATIOS
COST MANAGEMENT RATIOS
Formula:
Net Sales – Cost of Sales
Net Sales
COST MANAGEMENT RATIOS
Labor Cost Ratio
Formula:
Labor Cost
Net Sales
COST MANAGEMENT RATIOS
Employment Growth Rate
Formula:
# of workers (present) – (past)
# of workers (past)
PROFITABILITY RATIO
Measure earnings in relation to some base, such as
assets, sales or capital
PROFIT MARGIN ON SALES OR NET
PROFIT PERCENTAGE
Measures the percentage of net income to sales.
NET OPERATING INCOME TO SALES
Net Sales
Return on Investment
Net Income
Return on Investment=
COST VARIANCE
Price Factor
= Difference in Cost Price x Actual Units
Volume or Quantity Factor
=Difference in Units x BSPB Cost Price
*BSPB - budgeted data, standard data, previous year's data, or base year data.
4-WAY ANALYSIS
EXAMPLE
PREVIOUS YEAR
ACTUAL DATA
DATA
SALES IN UNITS 97500 110000
SELLING PRICE 9.00
8.80
COST PRICE 6.00 6.40
Source: http://accounting-financial-tax.com/2008/10/how-does-profit-variance-gross-profit-
analysis-work/
4-WAY ANALYSIS
Explanation for the decline of Php 28,500 in the Gross
Profit:
GAINS LOSSES
Gain due to Php 112,500
favorable sales
volume variance
Losses due to:
COST VARIANCE
Price Factor
= Difference in Cost Price x BSPB Units
Volume or Quantity Factor
=Difference in Units x BSPB Cost Price
Price-Volume Factor
=Difference in Cost Price x Difference in Units
*BSPB - budgeted data, standard data, previous year's data, or base year data.
6-WAY ANALYSIS
Explanation for the decline of Php 28,500 in the Gross Profit:
GAINS LOSSES
Gain due to favorable Php 112,500
sales volume variance
Losses due to:
Unfavorable sales price Php 19,500
variance
Unfavorable sales Php 2,500
price-volume variance
Unfavorable cost price Php 39,000
variance
Unfavorable cost Php 75,000
volume variance
Unfavorable cost price- Php 5,000
volume variance
Php 112,500F Php 141,000U
Php 112,500F- Php 141,000U = -Php 28,500
3-WAY ANALYSIS
Volume or Quantity Factor
=Difference in Units x BSPB Gross Profit per unit
Price Factor
= Difference in Selling Price x Actual Units
Cost Factor
=Difference in Cost Price x Actual Units
*BSPB - budgeted data, standard data, previous year's data, or base year data.
3-WAY ANALYSIS
Explanation for the decline of Php 28,500 in the Gross
Profit:
GAINS LOSSES
Gain due to Php 37,500
favorable volume
variance
Losses due to:
*BSPB - budgeted data, standard data, previous year's data, or base year data.
4-WAY ANALYSIS, PLUS
EXAMPLE
PREVIOUS YEAR
ACTUAL DATA
DATA
PRODUCT 1 SALES IN UNITS 4,000 4,500