[经济学]Chapter 4Analysis of Financial Statements.pptVIP

Analysis of Financial Statements Contents Income Statement Balance Sheets: Assets Balance Sheets: Liabilities Equity Other Data 4.1 Ratio analysis Why are ratios useful? Standardize numbers; facilitate comparisons Used to highlight weaknesses and strengths Main users Five Major Categories of Ratios 4.2 Liquidity Ratios The current ratio The current ratio measures the extent to which the claims of short-term creditors are covered by assets that are expected to be converted to cash fairly quickly. Current ratio = Current assets / Current liabilities Current assets: cash, marketable securities, accounts receivable, inventories. Current liabilities: accounts payable, short-term notes payable, current maturities of long-term debt, accrued taxes, and other accrued expenses (wages). Quick ratio Quick, or acid test, ratio is calculated by deducting inventory from current assets then dividing the remainder by current liabilities. Quick ratio = Current assets – Inventories Current liabilities Inventories are the least liquidity of a firm’s current assets Forecasted Current and Quick Ratios for 2008 Comments on CR and QR Expected to improve but still below the industry average. Liquidity position is weak. 4.3 Asset Management Ratios Asset management ratios measure how effectively a firm is managing its assets and whether or not the level of those assets is properly related to the level of operations as measured by sales. Asset management ratios The inventory turnover The inventory turnover ratio is defined as sales dividend by inventories. Inventory turnover ratio = Sales / Inventories It is be better to use an average inventories esp. if a firm’s business is highly seasonal , or if there has been a strong upward or downward sales trend during the year. Inventory Turnover Ratio vs. Industry Average Comments on Inventory Turnover Inventory turnover is below industry average. Firm might have old inventory, or