Course 201112 Setting up Financial Ratios. What are Financial Ratios? A financial ratio is a relative magnitude of two selected numerical values taken.

Slides:

Advertisements

Similar presentations

© March Finance ≠ Accounting What accounting? The process of collecting financial data, organizing and analyzing it using ageed- upon accounting.

Advertisements

McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-1 McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc., All Rights.

12-1 Discontinued Operations  Parts of a company’s operations that are eliminated  A one-time occurrence  Income/loss from discontinued operations separately.

Financial Analysis & Ratios

© 2010 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 11e by Slater Analyzing Financial Statements Analyzing Financial Statements.

Accounting: What the Numbers Mean Study Outlines and Overhead Masters Chapter 3.

RATIOS ANALYSISOF BATA SHOE COMPANY. Quick Ratio  Quick ratio of Bata Shoe Company shows the taka available for covering each of taka current asset.

FINANCIAL STATEMENT ANALYSIS

Profitability Ratios.

Analyzing and Interpreting Financial Statements

Financial Statement Analysis

1 Copyright © 2008 Thomson South-Western, a part of the Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under.

Chapter Thirteen Financial Statement Analysis Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin.

FINANCIAL STATEMENT ANALYSIS UNIT 12 Analysing financial statements involves evaluating three characteristics of a company: 1. its liquidity 2. its profitability.

1 Ratios Ratios è Two types: èLiquidity ratios (Solvency ratios) èProfitability ratios è Single ratio by itself is not very meaningful.

Financial Analysis Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

Financial Accounting, Tenth Edition

Financial Statement Analysis

Copyright © 2007 South-Western. All rights reserved. Chapter 15 Accounting and Financial Analysis.

Accounting Principles, Ninth Edition

- Brijesh Pitroda. The analysis of a Business' Health starts with Financial Statement Analysis.

$$ Entrepreneurial Finance, 5th Edition Adelman and Marks Pearson Higher Education ©2010 by Pearson Education, Inc. Upper Saddle River, NJ Chapter.

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 1 Accounting and Business.

Accounting Leslie Lum. What’s Accounting? l Accounting is the language of business l Allows us to look at a business and understand how it has done l.

Ratio Analysis. Financial Analysis Comparing Financial Statements Condensed Statement Analysis Trend Analysis Ratio Analysis Comparison with Similar Businesses.

Financial/Ratio Analysis

Chapter 8 Financial Plan Copyright 2006 Prentice Hall Publishing Company 1 Creating a Solid Financial Plan.

Creating a Solid Financial Plan CHAPTER 6 BBE2313 FUNDAMENTAL OF ENTREPRENUERSHIP.

Key Financial Ratios 1. Profitability Ratios Key ratios – Return on shareholders’ equity (ROE) – Return on assets (ROA) – Return on sales (ROS) – Gross.

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall 14-1.

Chapter 18-1 LO 5 Identify and compute ratios used in analyzing a firm’s liquidity, profitability, and solvency. Ratio Analysis Illustration.

Chapter 9: Financial Statement Analysis

Chapter 10: Financial Plan 1 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Creating a Successful Financial Plan.

Ratio Analysis What is ratio analysis? Ratio analysis is the use of various ratios to analyze financial statements. What is a ratio? Basically, it is.

Why Financials Matter Balance Sheet – Income Statement.

Financial Statements for a Sole Proprietorship Making Accounting Relevant Financial statements provide information to owners and managers about how the.

USING THE INFORMATION IN THE FINANCIAL STATEMENTS Financial ratios are calculated to evaluate the short-term liquidity of a company. These ratios include.

1 Chapter 9 Analysis of Financial Statements. 2 VII. Ratio Analysis  Builds on firm's financial statements  Easy to understand  Used by both equity.

Chapter 9: Financial Plan 1 Copyright 2002 Prentice Hall Publishing Company Creating a Successful Financial Plan.

Financial Statement Analysis: The Big Picture

COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.

12-1 ©2006 Prentice Hall, Inc ©2006 Prentice Hall, Inc. USING FIN STMT ANALYSIS TO EVALUATE FIRM PERFORMANCE  Learning objectives Learning objectives.

Definition of financial ratio FINANCIAL RATIO  One of the most common tools of managerial decision making  Financial ration involve the comparison of.

Analysis of Financial Statements. Learning Objectives  Understand the purpose of financial statement analysis.  Perform a vertical analysis of a company’s.

Analyzing Financial Statements Chapter 14 McGraw-Hill/Irwin © 2009 The McGraw-Hill Companies, Inc.

Analyzing Financial Statements Chapter 23.

Analysis and Interpretation of Accounting Statements Ratios.

Ratios Analyze and calculate specific values that give some measure of performance Analyze and calculate specific values that give some measure of performance.

Analyzing Financial Statements Chapter 13 McGraw-Hill/Irwin © 2009 The McGraw-Hill Companies, Inc.

Chapter 18: Financial Statement Analysis Basics of Financial Statement Analysis Tools of AnalysisRatio Analysis.

Section 3The Balance Sheet What You’ll Learn  The purpose of a balance sheet.  How to prepare a balance sheet.  How to analyze information on financial.

Financial Statement Analysis

Ratio Analysis Ratio analysis is a particular type of financial statement analysis where the relationship between two or more items from the financial.

Summary Of Previous Lecture  basic financial statements and their contents.  financial statement analysis and its importance to the firm and to outside.

Dr. BALAMURUGAN MUTHURAMAN INTER-COMPANY EVALUATION OF FINANCIAL STATEMENTS Chapter 5.

© McGraw-Hill Ryerson Limited, 2003 McGraw-Hill Ryerson Chapter 14 Analyzing Financial Statements.

Chapter 9: Financial Plan 1 Copyright 2002 Prentice Hall Publishing Company Creating a Successful Financial Plan.

Chapter 15 Financial Statement Analysis. Introduction How can we determine:  The ability of an organization to pay loans?  Whether we are earning a.

FINANCIAL STATEMENTS FOR A SOLE PROPRIETORSHIP Chapter 9.

Ratio Analysis. Use of Ratio Analysis To analyse Performance Liquidity Shareholder Investment.

© 2006 Prentice Hall Business Publishing Introduction to Financial Accounting, 9/e © 2006 Prentice Hall Business Publishing Introduction to Financial Accounting,

Ratio Analysis…. Types of ratios…  Performance Ratios: Return on capital employed. (Income Statement and Balance Sheet) Gross profit margin (Income Statement)

Chapter 18-1 Chapter 18 Financial Statement Analysis Accounting Principles, Ninth Edition.

Unit 3: Financial Ratios

GCSE Business Studies Unit 2 Developing a Business

Financial Analysis & Ratios

Accounting and Financial Information

Even More Financial Ratios

Chapter 25 Analysis of Accounts

Analyzing Financial Statements

Presentation transcript:

Course Setting up Financial Ratios

What are Financial Ratios? A financial ratio is a relative magnitude of two selected numerical values taken from an enterprise's financial statements. There are many standard ratios used to try to evaluate the overall financial condition of an organization. Financial ratios may be used by managers within a firm, by current and potential shareholders (owners) of a firm, and by a firm's creditors.

Operating Cycle Formula to calculate operating cycle: Operating Cycle = age of inventory + collection period Operating cycle definition and explanation: The operating cycle is the number of days from cash to inventory to accounts receivable to cash. It reveals how long cash is tied up in receivables and inventory. A long operating cycle means that less cash is available to meet short term obligations.

Liquidity Ratios Liquidity ratios measure the availability of cash to pay debt. In accounting, liquidity (or accounting liquidity) is a measure of the ability of a debtor to pay his debts as and when they fall due. It is usually expressed as a ratio or a percentage of current liabilities.

Profitability Ratios Profitability ratios measure the company's use of its assets and control of its expenses to generate an acceptable rate of return

Efficiency Ratios (Activity ratios) These are used to analyze how well a company uses its assets and liabilities internally. Efficiency ratios are important because an improvement in the ratios usually translate to improved profitability.

Operating Ratios The operating ratio is a financial term defined as a company's operating expenses as a percentage of revenue. A ratio that shows the efficiency of a company's management by comparing operating expense to net sales.