Financial Statement Analysis. Two Primary Statements Balance Sheet –Snapshot –BV vs MV Income Statement –Period of time.

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Presentation transcript:

Financial Statement Analysis

Two Primary Statements Balance Sheet –Snapshot –BV vs MV Income Statement –Period of time

Effects on Cash Flow Asset accounts Liability accounts Equity accounts

Ratio Analysis Five major categories –Liquidity –Long-term solvency –Asset management –Profitability –Market value

Ratio Analysis (cont) Liquidity –Current ratio (CR) –Quick ratio (QR) Important things to remember about these two ratios

Long-term Solvency Debt ratio Debt/equity ratio Times interest earned (TIE) Important things to remember about these ratios

Asset Management Total asset turnover (TATO) Inventory turnover Important things to remember about these two ratios

Profitability Return on equity (ROE) Return on assets (ROA) Profit margin (PM) Important things to remember about these ratios

Market Value Price to earnings ratio (P/E) Market to book ratio (M/B) Important things to remember about these ratios