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1、YCF正版可修改PPT(本科）会计专业英语Chapter8教学课件Chapter 8 Financial Statements Analysis2Learning ObjectivespExplainwhyfinancialstatementanalysisisimportantforacompanysdecisionmaking.pStatewhattrendanalysisis,andwhyitisimportant.pIdentifyhowcommon-sizeanalysisisusedtoevaluatethefinancialhealthofanorganization.pComp
2、utetheratioswidelyusedinfinancialstatementanalysisandexplainthesignificanceofeach.pDiscusstheusefulnessandlimitationsofratioanalysis.3Mini CaseNowthatyouhavelookedinthepreviouschaptercarefullyatthethreeprimaryfinancial statements used in understanding the financial position of thecompany,nextwewantt
3、orestatethedatainrelativeterms(ratios)sothatyoumaymoreeffectivelycomparethecompanywithcomparablefirms.The purpose of financial statements analysis(ratios)is to identify thefinancial strengths and weaknesses of a company,as compared to anindustrynormorbylookingattheratiosovertime.Inlearningabouthowto
4、calculateandusefinancialratiosisimportantfornotonlyanalysts,butforinvestors,lendersandmore.Ratiosallowanalyststocompare a various aspect of a companys financial statements againstothersinitsindustry,todetermineacompanysabilitytopaydividends,andchoosethefollowingfourquestionsasamapinusingfinancialrat
5、ios:pHowliquidisthefirm?pIsmanagementgeneratingadequateoperatingprofitsonthefirmsassets?pHowisthefirmfinanced?pAre the common stockholders receiving sufficient return on theirinvestment?4ContentpTopic 1:Basic Analytical ProcedurespTopic 2:Ratio Computations and InterpretationspTopic 3:Other Analytic
6、al Approaches5Topic 1:Basic Analytical Procedures1.Meaning of Financial Statement AnalysisFinancialstatementanalysisisdefinedastheprocessofidentifyingfinancialstrengthsandweaknessesofthefirmbyproperlyestablishingrelationshipbetweentheitemsofthebalancesheetandtheincomestatement.Itistheprocessofreview
7、ingandanalyzingacompanysfinancialstatementstomakebettereconomicdecisions.Financialstatementanalysisisamethodorprocessinvolvingspecifictechniquesforevaluatingrisks,performance,financialhealth,andfutureprospectsofanorganization.2.Objectives of Financial Statement AnalysisFinancialstatemntsanalysisishe
8、lpfulinassessingthefinancialpositionandprofitabilityofaconcern.6Topic 1:Basic Analytical Procedures3.Users of Financial Statement AnalysispCreditors:Anyonewhohaslentfundstoacompanyisinterestedinitsabilitytopaybackthedebt,andsowillfocusonvariouscashflowmeasures.pInvestors:Bothcurrentandprospectiveinv
9、estorsexaminefinancialstatementstolearnaboutacompanysabilitytocontinueissuingdividends,ortogeneratecashflow,ortocontinuegrowingatitshistoricalrate(dependingupontheirinvestmentphilosophies).7Topic 1:Basic Analytical Procedures3.Users of Financial Statement AnalysispManagement:Thecompanycontrollerprep
10、aresanongoinganalysisofthecompanysfinancialresults,particularlyinrelationtoanumberofoperationalmetricsthatarenotseenbyoutsideentities(suchasthecostperdelivery,costperdistributionchannel,profitbyproduct,andsoforth).pRegulatory authorities:Ifacompanyispubliclyheld,itsfinancialstatementsareexaminedbyth
11、eSecuritiesandExchangeCommission(SEC);forexample,ifthecompanyfilesintheUnitedStatesthentoseeifitsstatementsconformtothevariousaccountingstandardsandtherulesoftheSEC.8Topic 1:Basic Analytical Procedures4.Tools of AnalysisTrend Analysis:Trendanalysisisthecomparisonoffinancialstatementinformationoveras
12、eriesofreportingperiods.Typically,thismeansthateverylineitemonanincomestatementisstatedasapercentageofgrosssales,whileeverylineitemonabalancesheetisstatedasapercentageoftotalassets.Thus,trendanalysisisthereviewoftheresultsofmultipletimeperiods.Trendanalysisisalsoknownascrosssectionalanalysis.Itisuse
13、dprimarilyinintracompany(withinacompany)comparisons.9Topic 1:Basic Analytical Procedures4.Tools of AnalysisCommon Size Analysis:CommonSizeanalysisalsoknownas percentage analysis;isthereviewoftheproportionofaccountstoeachotherwithinasingleperiod.Itusedinbothintracompanyandintercompanycomparisons.Comm
14、on-sizebalancesheetsandincomestatementsareusedtocomparetheperformanceofdifferentcompaniesoracompanysprogressovertime.10Topic 1:Basic Analytical Procedures4.Tools of AnalysisRatio analysis:Financialratiosaremathematicalcomparisonsoffinancialstatement accounts or categories.These relationshipsbetweent
15、hefinancialstatementaccountshelptheusersof accounting information to understand how well abusinessisperformingandofareasneedingimprovement.FinancialRatiosareusedastoolstohelpus squeeze as much information as possible from thefinancialstatements.Itmustbekeptinmind;however,that a financial ratio is on
16、ly one number divided byanotherandonlyyieldsanumber.Theratiotakesonmeaning when compared with other firms or industryaverages.11Topic 2:Ratio Computations and InterpretationsAnalysis of differents Ratios and theirinterpreationsVinHuaisconsideringaninvestmentinoneofthetwofastfoodrestaurantchainsbecau
17、sehebelievesthetrendtowardeatingoutmoreoftenwillcontinue.HischoiceshavenarrowedtoFastSandwichandGiantPizza,whosebalancesheetsandincomestatementsfollow:12Topic 2:Ratio Computations and Interpretations13Topic 2:Ratio Computations and Interpretations14Topic 2:Ratio Computations and InterpretationsBased
18、ontheabovecomparativebalancesheetandincomestatementsoftwocompanies,wewillexplaintheseratiosthroughoutthissection.pRatiosusedtomeasureprofitability(focusisontheincomestatement)pRatiosusedtomeasureshort-term liquidity(focusisonshort-termliabilities)pRatiosusedtomeasurelong-term solvency(focusisonlong-
19、termliabilities)pRatiosusedtomeasuremarket valuation(focusisonmarketvalueofthecompany)15Topic 2:Ratio Computations and Interpretations1.Profitability Ratios:Profitabilityratioscompareincomestatementaccountsandcategoriestoshowacompanysabilitytogenerateprofitsfromitsoperations.Ratiosfocusoncompanysret
20、urnoninvestmentininventoryandotherassets.Theseratiosbasicallyshowhowwellcompaniescanachieveprofitsfromtheiroperations.Investorsandcreditorscanuseprofitabilityratiostojudgeacompanysreturnoninvestmentbasedonitsrelativelevelofresourcesandassets.Inotherwords,profitabilityratioscanbeusedtojudgewhethercom
21、paniesaremakingenoughoperationalprofitfromtheirassets.Inthissense,profitabilityratiosrelatetoefficiencyratiosbecausetheyshowhowwellcompaniesareusingtheirassetstogenerateprofits.Profitabilityisalsoimportanttotheconceptofsolvencyandgoingconcern.Herearesomeofthekeyratiosthatinvestorsandcreditorsconside
22、rwhenjudginghowprofitableacompanyshouldbe16Topic 2:Ratio Computations and InterpretationsGross Margin RatioThisshowstheaverageamountofprofitconsideringonlysalesandthecostoftheitemssold.Thistellshowmuchprofittheproductorserviceismakingwithoutoverheadconsiderations.Assuch,itindicatestheefficiencyofope
23、rationsaswellashowproductsarepriced.Widevariationsoccurfromindustrytoindustry.Itindicatesthegrossmargingeneratedforeachdollarinnetsales.Formula:Grossmarginratio=GrossmarginNetsalesWhere:Gross margin=Netsales-Costofgoodssold17Topic 2:Ratio Computations and InterpretationsCalculation:FastSandwich=30%G
24、iantPizza=29%Interpretation:Asyoucansee,FastSandwichhasaratioof30%,veryneartoGiantPizza,29%.Thesearehighratiointherestaurantindustry.Thismeansthatafterpaysoffhisinventorycosts,companyhasofitssalesrevenuetocoverhisoperatingcosts.18Topic 2:Ratio Computations and Interpretations2.Net Margin RatioTheNet
25、marginorprofitmarginratiodirectlymeasureswhatpercentageofsalesismadeupofnetincome.Inotherwords,itmeasureshowmuchprofitsareproducedatacertainlevelofsales.Thisratioalsoindirectlymeasureshowwellacompanymanagesitsexpensesrelativetoitsnetsales.Thatiswhycompaniesstrivetoachievehigherratios.Theycandothisby
26、eithergeneratingmorerevenueswhykeepingexpensesconstantorkeeprevenuesconstantandlowerexpenses.Likemostprofitabilityratios,thisratioisbestusedtocomparelikesizedcompaniesinthesameindustry.Thisratioisalsoeffectiveformeasuringpastperformanceofacompany.Formula:Netmarginratio=NetincomeNetsales19Topic 2:Rat
27、io Computations and InterpretationsCalculation:FastSandwich=3.4%GiantPizza=4.0%Interpretation:Asyoucansee,FastSandwichonlyconverted3.4percentofitssalesintoprofits.Contrastthatwiththiscompany,GiantPizzahasalsoonly4%of$86,000ofnetsalesand$3400ofnetincome.Thisyearbothmayhavemadefewersalesbuttheycancute
28、xpensesandcanbeabletoconvertmoreofthesesalesintoprofitsinfuture.20Topic 2:Ratio Computations and InterpretationsReturn on Assets(ROA)Thisratiomeasurestheoperatingefficacyofacompanywithoutregardstofinancialstructureandindicateshowmuchnetincomewasgeneratedfromeachdollarinaverageassetsinvested.Formula:
29、Returnonassets=NetincomeAveragetotalassetsWhere:Average total assets=(Previouslyreportedtotalassets+currenttotalassets)221Topic 2:Ratio Computations and InterpretationsCalculation:FastSandwich=6.0%GiantPizza=6.1%Interpretation:Asyoucansee,herealsobothcompanieshaveverysimilaramountofreturnsfromassets
30、.22Topic 2:Ratio Computations and InterpretationsReturn on Common Shareholders EquityThisratiomeasuresthereturnaccruingtocommonshareholdersandexcludespreferredshareholders.Formula:Returnoncommonshareholdersequity=(Netincome-preferreddividends)AveragecommonshareholdersequityWhere:Average common equit
31、y=(previouslyreportedcommonshareholdersequity+currentcommonshareholdersequity)/2.23Topic 2:Ratio Computations and InterpretationsCalculation:FastSandwich=11.3%GiantPizza=17.9%Interpretation:Asyoucansee,theprofitabilityofshareholdersinvestmentsbetweenthetwocompaniesarevarieswiththesimilaramountofinve
32、stment.GiantPizzaperformsbetterthantheFastSandwichinthiscase.24Topic 2:Ratio Computations and InterpretationsEarnings Per Share(EPS):Earningspershare,alsocallednetincomepershare,isamarketprospectratiothatmeasurestheamountofnetincomeearnedpershareofstockoutstanding.Higherearningspersharearealwaysbett
33、erthanalowerratiobecausethismeansthecompanyismoreprofitableandthecompanyhasmoreprofitstodistributetoitsshareholders.Formula:Earningspershare=(Netincome-preferreddividends)WeightedaveragenumberofsharesoutstandingWhere:Weighted average number of shares outstanding=Thenumberofsharesoutstandingduringeac
34、hmonth,weightedbythenumberofmonthsthoseshareswereoutstanding.25Topic 2:Ratio Computations and InterpretationsCalculation:FastSandwich=1.18GiantPizza=1.13Interpretation:Asyoucansee,FastSandwichEPSfortheyearis$1.18.Thismeansthatifthiscompanydistributedeverydollarofincometoitsshareholders,eachsharewoul
35、dreceive1.18dollars.Sameisapplicablefortheothercompanyalso.26Topic 2:Ratio Computations and InterpretationsShort-Term Liquidity Ratio:Suppliers and other short-term lenders often want toevaluate whether companies can meet short-termobligations.Inotherwords,theseratiosshowthecashlevelsofacompanyandth
36、eabilitytoturnotherassetsintocashtopayoffshort-termliabilitiesandothercurrentobligations.Liquidityisnotonlyameasureofhowmuchcashabusinesshas.Itisalsoameasureofhoweasyitwillbeforthecompanytoraiseenoughcashorconvertassetsintocash.Assetslikeaccountsreceivable,tradingsecurities,and inventory are relativ
37、ely easy for manycompaniestoconvertintocashintheshortterm.Thus,alloftheseassetsgointotheliquiditycalculationofacompany.Herearethemostcommonshort-termliquidityratios.27Topic 2:Ratio Computations and InterpretationsCurrent RatioThisratioisalsocalledworking capital ratiobyidentifyingworkingcapitalfromt
38、hedifferencebetweencurrentassetandcurrentliabilities.Itisameasureoftheabilityofafirmtomeetitsshort-termobligations.Ingeneral,aratioof2to3isusuallyconsideredgood.Toosmallaratioindicatesthatthereissomepotentialdifficultyincoveringobligations.Ahighratiomayindicatethatthefirmhastoomanyassetstiedupincurr
39、entassetsandisnotmakingefficientusetothem.Itisfoundbydividingcurrentassetsbycurrentliabilities.Formula:Currentratio=CurrentassetsCurrentliabilities28Topic 2:Ratio Computations and InterpretationsCalculation:FastSandwich=1.5timesGiantPizza=2.3timesInterpretation:Asyoucansee,GiantPizzaonlyhasenoughcur
40、rentassetstopayoffitscurrentliabilities.Thisshowsthatthiscompanyisnothighlyleveragedandlessrisky.Creditorswouldpreferacurrentratioofatleast1or2,sothatallthecurrentliabilitieswouldbecoveredbythecurrentassets.Sincebothcompaniesratioismorethan1times,itisprobablethattheywillgetapprovedfromcreditorsandin
41、vestors.29Topic 2:Ratio Computations and InterpretationsQuick RatioQuickassetsarealsocurrentassetsbutitexcludesinventory.Thequick(oracid-test)ratioisamorerigorousmeasureofliquidity.Itindicateswhetheracompanyhassufficientquickorhighlyliquidassetstocovercurrentliabilities.Thequickratioisquickassetsdiv
42、idedbycurrentliabilities.Formula:Quickratio=Cash+marketablesecurities+accountsreceivables(A/R)Currentliabilities30Topic 2:Ratio Computations and InterpretationsCalculation:FastSandwich=1.0timesGiantPizza=1.6timesInterpretation:Asyoucanseebothcompaniesratiosare1.07and1.0respectively.ThismeansthatComp
43、aniescanpayoffallofhercurrentliabilitieswithquickassetsandstillhavesomequickassetsleftover.31Topic 2:Ratio Computations and InterpretationsReceivable Turnover RatioThisratioindicateshowmanytimesreceivablesarecollectedinagivenperiodandisfoundbydividingcreditsalesbyaverageaccountsreceivableOnlycredits
44、alesestablishareceivable,sothecashsalesareleftoutofthecalculation.Thisratioprovidesanindicatoroftheeffectivenessofacompanyscreditpolicy.Thehighreceivableturnoverwillindicatethatthecompanycollectsitsduesfromitscustomersquickly.Ifthisratioistoohighcomparedtotheindustry,thismayindicatethatthecompanydoe
45、snotofferitsclientsalongenoughcreditfacility,andasaresultmaybelosingsales.Adecreasingreceivable-turnoverratiomayindicatethatthecompanyishavingdifficultiescollectingcashfromcustomers,andmaybeasignthatsalesareperhapsoverstated.Formula:Receivableturnoverratio=NetcreditsalesAverageaccountsreceivables32T
46、opic 2:Ratio Computations and InterpretationsWhere:Average receivables=(previouslyreportedaccountreceivable+currentaccountreceivables)/2.Calculation:FastSandwich=26.5timesGiantPizza=13.2timesInterpretation:Asyoucansee,theturnoverofFastSandwichissubstantiallyhigherthantheGiantPizza.ThismeansthatFastS
47、andwichcancollectitsreceivablesabout26.5timesayear.33Topic 2:Ratio Computations and InterpretationsAverage Collection PeriodThisratioprovidesthesameinformationasreceivableturnoverexceptthatitindicateshowmanydaysittakesonaveragetocollectoncreditsales.Thisratioistypicallycomparedtothecompanyscreditter
48、mstoevaluatehoweffectivelyreceivablesarebeingcollected.Formula:AverageCollectionPeriod=365days_ReceivablesturnoverratioCalculation:FastSandwich=13.8daysGiantPizza=27.7daysInterpretation:Asyoucansee,whenFastSandwichrestaurantmakesacreditsale,itwilltakehim13.8daystocollectthecashfromthosesaleswhereas,
49、GiantPizzaneeds27.7days.Analystsfrequentlyusetheaveragecollectionperiodtoassesstheeffectivenessofcompanyscreditandcollectionpolicies.34Topic 2:Ratio Computations and InterpretationsInventory Turnover RatioThisratioindicateshowmanytimesinventoryissoldandrestockedina given period.It is calculated as c
50、ost of goods sold divided byaverage inventory.A high inventory ratio is an indicator that thecompanysellsitsinventoryrapidlyandthattheinventorydoesnotexpire,whichmaymeanthereislessriskthattheinventoryreportedhasdecreasedinvalue.Formula:Inventoryturnover=CostofgoodssoldAverageinventoryWhere:Average i