financial performance财务分析.pptVIP

Financial performance;What is meant by interpretation?;APPRAISAL OF ACCOUNTS;RATIO ANALYSIS ? COMPARATIVES ARE HELPFUL – WITH PREVIOUS YEARS – WITH BUDGETS FORECASTS – WITH SIMILAR COMPANIES – WITH MACRO ECONOMIC CONDITIONS;Example 1: Cross sectional comparison; Example 2: Time series comparison 2.Has there been an increase or decrease in profitability from one year to the next?;Profitability ? RETURN ON CAPITAL EMPLOYED (ROCE) Generally some sort of measure of profit as a percentage of capital in a business: ? R.O. C.E. = PROFIT BEFORE INTEREST AND TAX / TOTAL ASSETS - CURRENT LIAB.;INCOMESTATEMENT;BALANCESHEET;Profitability PROFIT MARGINS Generally some sort of % measure of profit from activity. GROSS PROFIT MARGIN (%) = GROSS PROFIT / SALES NET PROFIT MARGIN (%) = OPERATING PROFIT (PBIT) / SALES;Gross Profit Percentage;Gross Profit Percentage;Net profit margin;BALANCESHEET;BALANCESHEET;BALANCESHEET; LIQUIDITY RATIOS ? ‘Liquidity’ refers to the ability of a business to generate sufficient cash to pay its liabilities as they fall due for payment. ? It is linked directly to the short-term solvency of a business. ? A business goes bust when it cannot pay its debts (it becomes insolvent).;CURRENT RATIO ? = TOTAL CURRENT ASSETS / TOTAL CURRENT LIABILITIES ? RELEVANCE TO CASH FLOW ? GUIDE TO ADEQUACY – a magic figure? – depends on realisation of stock and collection of debtors.;INCOMESTATEMENT;BALANCESHEET;FACTORS NEGATIVELY AFFECTING THIS RATIO:; LIQUIDITY RATIO (Acid test ratio or Quick ratio) = CURRENT ASSETS EXCLUDING STOCK / CURRENT LIABILITIES ? RELEVANCE TO CASH FLOW ? GUIDE TO ADEQUACY – a magic figure? – may be excessively prudent as not all current liabilities are due for immediate payment.;INCOMESTATEMENT;BALANCESHEET;Solvency in general ;Efficiency ? ASSET TURNOVER – Generally some measure of what sales we get from some category of assets e.g. to see “how hard the assets are be