对外经贸大学财务报表分析课件 12.ppt

Financial Statements Analysis Ratios Instructor: Xu Qin Ph.D, CPA, CIA, ACCA(A) E-mail: emailxuqin@ Courseware of University of International Business and Economics * Key financial ratios Caution!!!!!! Ratios can serve as screening devices, indicate areas of potential strength or weakness, and reveal matters that need further investigation. Ratios are valuable, BUT. . . They do not provide answers in and of themselves and are not predictive Ratios should be used with other elements of financial analysis There are no “rules of thumb” that apply to interpretation of ratios Keeping this in mind, let’s take a look at some of the ratios. . . . * Liquidity Ratios: Short-Term Solvency Measures ability to meet short-term cash needs Current liabilities are used as the denominator Represent the most urgent debts Cash or the conversion to cash of other current assets The available cash resources to satisfy these obligations Limited B/S is prepared as of a particular date Accounts receivable and inventory may not be truly liquid Current Ratio 1 * Liquidity Ratios: Short-Term Solvency Measures ability to meet short-term cash needs more rigorously The numerator eliminates inventory – the least liquid current asset and the most likely source of losses Be examined in relation to the firm’s own trends and to other firms operating in the same industry Quick or Acid-Test Ratio 2 * Liquidity Ratios: Short-Term Solvency Focuses on ability of the firm to generate operating cash flows as a source of liquidity The numerator as an approximation of cash resources Cash and marketable securities – truly liquid current assets Cash flow from operating activities – the amount of cash generated from the firm’s operations Cash Flow Liquidity Ratio *Cash flow from operating activities 3 * Liquidity Ratios: Short-Term Solvency Helps gauge liquidity of accounts receivable (ability to collect cash from customers) Also provides information about a company’s credit policies Too lenient Too restricti