财务管理基础工业出版社版第三章.pptxVIP

Chapter OutlineRatio analysis and its importanceUse of ratio for measurementsThe DuPont system of analysisTrend analysisEvaluation of reported income to identify distortion1-Ratio AnalysisFinancial ratiosUsed to weigh and evaluate the operating performance of a firmUsed to compare performance record as against similar firms in the industryAnalyzing ratios and numerical calculationsSuch data is provided by various organizations1-Ratios and their ClassificationA. Profitability ratios1. Profit margin2. Return on assets (investment)3. Return on equityB. Asset utilization ratios4. Receivable turnover5. Average collection period6. Inventory turnover7. Fixed asset turnover8. Total asset turnover1-Ratios and their Classification (cont’d)C. Liquidity ratios 9. Current ratio10. Quick ratioD. Debt utilization ratios11. Debt to total assets12. Times interest earned13. Fixed charge coverage1-Types of RatiosProfitability ratiosMeasurement of the firm’s ability to earn an adequate return on:SalesAssetsInvested capitalAsset utilization ratiosMeasures the speed at which the firm is turning over accounts receivable1-Types of Ratios (cont’d)Liquidity ratiosEmphasizes the firm’s ability to pay off short-term obligations as and when dueDebt utilization ratiosEstimates the overall debt position of the firmEvaluates in the light of asset base and earning power1-Financial Statement for Ratio Analysis1-Profitability Ratios1-DuPont System of AnalysisA satisfactory return on assets might be derived through:A high profit marginA rapid turnover of assets (generating more sales per dollar of its assets)Or bothReturn on assets (investment) = Profit margin × Asset turnover 1-DuPont System of Analysis (cont’d)A satisfactory return on equity might be derived through:A high return on total assets A generous utilization of debtOr a combination of bothReturn on equity = Return on assets (investment) (1 – Debt/Assets)1-DuPont Analysis1-Return of Wal-Mart versus Macy’s using the Du Pont method o