Kế toán, kiểm toán - Chapter nine: Financial statement analysis

Chapter NineFinancial Statement Analysis© 2015 McGraw-Hill Education.Methods of AnalysisHorizontal AnalysisPercentage AnalysisVertical AnalysisRatio Analysis 9-2Horizontal and Percentage Analysis Horizontal analysis (or trend analysis) refers to studying the behavior of individual financial statement items over several accounting periods. Absolute AmountsPercentage Analysis 9-3Milavec Company Horizontal Analysis20152014 9-4Vertical AnalysisVertical analysis uses percentages to compare individual components of financial statements to a key statement figure. A common-size financial statement is a vertical analysis in which each financial statement item is expressed as a percentage. 9-5Milavec Company Vertical Analysis20122011 9-620122011 9-7Ratio AnalysisRatio analysis involves studying various relationships between different items reported in a set of financial statements. 9-8Liquidity RatiosLiquidity ratios indicate a company’s ability to pay short-term debts. They focus on current assets and current liabilities.Working CapitalCurrent RatioQuick RatioAccounts Receivable RatiosInventory Ratios 9-9Solvency RatiosSolvency ratios are used to analyze a company’s long-term debt-paying ability and its financing structure.Debt to Assets RatioDebt to Equity RatioNumber of Times Interest EarnedPlant Assets to Long-Term Liabilities 9-10Profitability RatiosProfitability ratios measure a company’s ability to generate earnings.Net Margin (or Return on Sales)Asset Turnover RatioReturn on InvestmentReturn on Equity 9-11Stock Market RatiosStock market ratios analyze the earnings and dividends of a company.Earnings Per ShareBook ValuePrice-Earnings (PE) RatioDividend Yield 9-12Earnings Per ShareEarnings per ShareNet Earnings Available for Common Stock Average Number of Outstanding Common Shares=This measure indicates how muchincome was earned for each share of common stock outstanding. 9-13Earnings Per Share $25,000 (net income) - $3,000 (preferred dividend) = $1.60 per share(15,000 + 12,500)/2 (average outstanding common shares) 9-14Book Value Per ShareThis ratio measures the amount that would be distributed to holders of each share of common stock if all assets were sold at their balance sheet carrying amounts and if all creditors were paid off.Book Value per ShareStockholders’ Equity - Preferred Dividends Outstanding Common Shares= 9-15Book Value Per Share$362,000 - $50,000 15,000 = $20.80 per share 9-16Price-Earnings RatioPrice-EarningsRatio Market Price Per Share Earnings Per Share=This ratio compares the earnings of a company to the market price for a share of the company’s stock. 9-17Dividend YieldDividendYieldDividends Per ShareMarket Price Per Share=This ratio identifies the return, in terms of cash dividends, on the current market price of the stock. 9-18Limitations of Financial Statement AnalysisDifferent IndustriesChanging Economic EnvironmentAccounting Principles 9-19End of Chapter Nine 9-20