财务管理基础13版3Financial Analysis.ppt

Financial Analysis 3 Chapter Outline Ratio analysis and its importance Use of ratio for measurements The DuPont system of analysis Trend analysis Evaluation of reported income to identify distortion Ratio Analysis Financial ratios Used to weigh and evaluate the operating performance of a firm Used to compare performance record as against similar firms in the industry Analyzing ratios and numerical calculations Such data is provided by various organizations Ratios and their Classification A. Profitability ratios 1. Profit margin 2. Return on assets (investment) 3. Return on equity B. Asset utilization ratios 4. Receivable turnover 5. Average collection period 6. Inventory turnover 7. Fixed asset turnover 8. Total asset turnover Ratios and their Classification (cont’d) C. Liquidity ratios 9. Current ratio 10. Quick ratio D. Debt utilization ratios 11. Debt to total assets 12. Times interest earned 13. Fixed charge coverage Types of Ratios Profitability ratios Measurement of the firm’s ability to earn an adequate return on: Sales Assets Invested capital Asset utilization ratios Measures the speed at which the firm is turning over accounts receivable Types of Ratios (cont’d) Liquidity ratios Emphasizes the firm’s ability to pay off short-term obligations as and when due Debt utilization ratios Estimates the overall debt position of the firm Evaluates in the light of asset base and earning power Financial Statement for Ratio Analysis Profitability Ratios DuPont System of Analysis A satisfactory return on assets might be derived through: A high profit margin A rapid turnover of assets (generating more sales per dollar of its assets) Or both Return on assets (investment) = Profit margin × Asset turnover 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 debt Or a combination of both Return on equity = Return on assets (investment)