财务管理英文Chapter6.pptVIP

Chapter 6 Financial Statement Analysis Financial Statement Analysis Financial Statements A Possible Framework for Analysis Ratio Analysis Trend Analysis Common-Size and Index Analysis Uses of Financial Statement Information Internal uses: performance evaluation planning for the future External uses: evaluation by outside parties evaluation of main competitors identifying potential takeover targets Examples of Internal Uses of Statement Analysis Plan -- Focus on assessing the current financial position and evaluating potential firm opportunities. Control -- Focus on return on investment for various assets and asset efficiency. Understand -- Focus on understanding how suppliers of funds analyze the firm. Examples of External Uses of Statement Analysis Trade Creditors -- Focus on the liquidity of the firm. Bondholders -- Focus on the long-term cash flow of the firm. Shareholders -- Focus on the profitability and long-term health of the firm. Primary Types of Financial Statements Income Statement A summary of a firm’s revenues and expenses over a specified period, ending with net income or loss for the period. Revenue – Expenses ≡ Income The Balance Sheet Balance Sheet Analysis When analyzing a balance sheet, the financial manager should be aware of three concerns: Accounting liquidity Debt versus equity Value versus cost Accounting Liquidity Refers to the ease and quickness with which assets can be converted to cash. Current assets are the most liquid. Some fixed assets are intangible. The more liquid a firm’s assets, the less likely the firm is to experience problems meetingshort-term obligations. Liquid assets frequently have lower rates of return than fixed assets. Debt versus Equity Generally, when a firm borrows it gives the bondholders first claim on the firm’s cash flow. Thus shareholder’s equity is the residual difference between assets and liabilities. Financial leverage increases the potential reward to shareholders, but also increases the potential for f