Analysis Of Financial Statements

taufikur@ugm.ac.id

Ratio Analysis
 Evaluate Financial Statements
– Analyze firm’s performance – Comparing firm’s performance with that other firms in the same industry – Evaluating trends in the firm’s financial position over time

 Predict Future Earning and Dividends
– Investor’s view – Management’s view

    

Liquidity Ratio Asset Management Ratio Debt Management Ratio Profitability Ratio Market Value Ratio

160 1.040 3.480 2.160 939.866.802 1.152 2009 7.000 1.926.202.160 380.950 263.360 1.287.716.112 1.592 .282 632.680.120 817. Net FA Total assets 2010E 85.197.790 2.497.Balance Sheet: Assets Cash AR Inventories Total CA Gross FA Less: Deprec.632 878.

592 .000.Liabilities and Equity 2010E 2009 Accounts payable 436.000 720.832 Total L & E 3.552.000 489.000 Common stock 1.000 Accruals 408.760 Long-term debt 500.152 2.936 460.600 Total CL 1.733.866.160 Notes payable 600.584) (327.444.800 524.497.000 1.168) Total equity 1.352 132.800 1.000 Retained earnings (128.680.

000 680.400 5.Income Statement 2010E 2009 7.584 (519.000 627.560) 169.560) 88. EBT Taxes (40%) Net income .600 5.834.960 116.600 (573.000 176.624) 253.728.056 (346.600) 116.000 422.960 510.640 (866.000 680.035.728.000 5.936) Sales COGS Other expenses EBITDA Depreciation EBIT Interest exp.640 (690.

000 2009 100.220 $12.199) $0.000 $1.Other Data 2010E Shares out.014 $0.25 $40.000 ($5.000 .110 $2.17 $40. EPS DPS Stock price Lease pmts 250.

Ratio Analysis  Evaluate Financial Statements – Analyze firm’s performance – Comparing firm’s performance with that other firms in the same industry – Evaluating trends in the firm’s financial position over time  Liquidity Ratios – Ability to Meet Short-term Obligations: • The Current Ratio = Current Assets : Current Liabilities • Quick. or Acid test. ratio = current assets-Inventories current liabilities .

Liquidity Ratios $2. CA .445 .Inv. QR10 = CL $2.716 = = 0. $1.445 = 1.67x.680 – $1.680 CA CR10 = CL = $1.85x.

Ratio Analysis Asset Management Ratio  Evaluating Inventories – The Inventory Turnover Ratio = Sales : Inventories  Evaluating Receivables – The Days Sales Outstanding (DSO) = Receivable : (Annual sales:360)  Evaluating Fixed Assets – Fixed Assets Turnover Ratio = Sales : Net Fixed Assets  Evaluating Total Assets – Total Assets Turnover Ratio = Sales : Total Assets .

036/360 = 44. turnover = Sales Inventories $7.Asset Management Ratio Inv.9.036 = 4. .10x.716 = Receivables DSO = Average sales per day Receivables $878 = Sales/360 = $7. $1.

036 = 2. = $3. $817 Total assets = turnover Sales Total assets $7.036 = 8.01x.61x.Asset Management Ratio Fixed assets Sales = turnover Net fixed assets = $7.497 .

6%.445 + $500 = 55. $3. Total debt Debt ratio = Total assets = $1.8x. Time Interest Earned Ratio.6 = 5.Calculate the debt ratio. and EBITDA coverage ratios. expense = $510. $88 .497 EBIT TIE = Int.

2x. .EBITDA coverage = EBITDA + Lease payments (in cash) Interest Lease Loan expense + pmt.0 + $40 = $88 + $40 + $0 = 5. + repayments $510.6 + $117.

Ratio Analysis Profitability Ratio  Profit Margin on Sales = Net income for common stockholder : Sales  Basic Earning Power (BEP) = EBIT : Total Assets  Return on Total Assets (ROA) = Net income for common stockholder : Total Assets  Return on Common Equity (ROE) = Net income for common stockholder : Common Equity .

Profitability Ratio NI $253.M. $3.6 = 14.6 P. = Sales = $7.6%.497 .036 = 3. EBIT BEP = Total assets = $510.6%.

497 Net income ROE = Common equity = $253.6 = 16. $1.552 .Profitability Ratio ROA Net income = Total assets  = $253.3%.6 = 7.3%. $3.

Ratio Analysis Market Value Ratio|  Price Earning Ratio (P/E) = Price per share : Earning per share  Price/Cash Flow Ratio = Price per share : Cash flow per share  Market/Book Ratio = Market price per share : Book value per share Book value per share = Common equity Shares outstanding .

6 EPS = Shares out. Price per share $12.01 = 12x.01. = 250 = $1.Market Value Ratio| Price = $12. EPS .17.17 P/E = = $1. NI $253.

= $253.21x. 250 Price per share P/CF = Cash flow per share $12.0 = $1.48. . CF per share = Shares out.Market Value Ratio NI + Depr.6 + $117.48 = 8.17 = $1.

17 = $6. equity BVPS = Shares out. price per share M/B = Book value per share $12.21 = 1.Market Value Ratio Com. $1.552 = $6. . = 250 Mkt.21.96x.

Tying The Ratios Together: The Du Pont Chart  The Du Pont system focuses on: – Expense control (Profit Margin) – Asset utilization (Total Asset Turnover) – Debt utilization (Equity Multiplier = Total Asset:Common Equity )  Look at Figure 3-2  Du Pont Equation:  ROA = PM x TATO = (NI/Sales) x (Sales/TA)  Extended Du Pont Equation:  ROE = ROA x Equity Multiplier = (NI/Sales) x (Sales/TA) x (TA/Common Eq) .

497 Total Costs $4500 Sales $ 7.6% Multiplied by Total Assets Turnover 2.25X (equity multiplier) Multiplied by PM 3.Du Pont Chart ROE 16.036 Divided into Subtracted from Interest + preferred Dividend $143 NI $253.6 Sales $7.01X Sales $ 7.680 to Cash + Marketable Securities $86 Other Operating Costs $4080 Depreciation $117 Taxes $160 Account Receivable $878 Inventories $1.716 .3 % (Du Pont Equation) Asset/Equity 2.036 Fixed Assets $817 Added Current Assets $2.036 Divided into Total Assets $3.4 % (Extended Du Pont Equation) ROA 7.

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