1、Chapter 17,Analysis of Financial Statements,Conceptual Learning Objectives,C1: Explain the purpose of analysis C2: Identify the building blocks of analysis C3: Describe standards for comparisons in analysis C4: Identify the tools of analysis,A1: Summarize and report results of analysis A2: Appendix
2、17A: Explain the form and assess the content of a complete income statement,Analytical Learning Objectives,P1: Explain and apply methods of horizontal analysis P2: Describe and apply methods of vertical analysis P3: Define and apply ratio analysis,Procedural Learning Objectives,Application of analyt
3、ical tools,Involves transforming data,Reduces uncertainty,Basics of Analysis,C 1,Financial statement analysis helps users make better decisions.,Purpose of Analysis,C 1,Building Blocks of Analysis,C 2,Income Statement,Balance Sheet,Statement of Stockholders Equity,Statement of Cash Flows,Notes,Infor
4、mation for Analysis,C 2,Standards for Comparison,C 3,Horizontal Analysis,Time,Comparing a companys financial condition and performance across time.,Tools of Analysis,C 4,Comparing a companys financial condition and performance to a base amount,Tools of Analysis,V e r t i c a lA n a l y s i s,C 4,Too
5、ls of Analysis,C 4,Time,Now, lets look at some ways to use horizontal analysis.,Horizontal Analysis,C 4,Horizontal Analysis,C 4,Calculate Change in Dollar Amount,Dollar Change,Analysis Period Amount,Base Period Amount,=,Comparative Statements,P 1,Calculate Change as a Percent,Percent Change,Dollar C
6、hangeBase Period Amount,100,=,Comparative Statements,P 1,($11,500 $23,500) 100 = 48.9%,$12,000 $23,500 = $(11,500),P 1,P 1,Trend Analysis,Now, lets look at trend analysis!,P 1,Trend analysis is used to reveal patterns in data covering successive periods.,Trend Analysis,P 1,Berry Products Income Info
7、rmation For the Years Ended December 31,2001 is the base period so its amounts will equal 100%.,Trend Analysis,P 1,Berry Products Income Information For the Years Ended December 31,Trend Analysis,P 1,Berry Products Income Information For the Years Ended December 31,Trend Analysis,P 1,Trend Analysis,
8、We can use the trend percentages to construct a graph so we can see the trend over time.,P 1,V e r t i c a lA n a l y s i s,Now, lets look at some vertical analysis tools!,Common-Size Statements,P 2,Calculate Common-size Percent,Common-size Percent,Analysis Amount Base Amount,100,=,Common-Size State
9、ments,P 2,($12,000 $315,000) 100 = 3.8%,($23,500 $289,700) 100 = 8.1%,P 2,P 2,P 2,P 2,This is a graphical analysis of Clover Corporations common-size income statement for 2007.,Common-Size Graphics,P 2,Lets use the following financial statements for Norton Corporation for our ratio analysis.,Ratio A
10、nalysis,Ratio Analysis,P 3,P 3,P 3,P 3,Current Ratio,Acid-test Ratio,Accounts Receivable Turnover,Inventory Turnover,Days Sales Uncollected,Days Sales in Inventory,Total Asset Turnover,Liquidity and Efficiency,P 3,Use this information to calculate the liquidity and efficiency ratios for Norton Corpo
11、ration.,Liquidity and Efficiency,P 3,Working capital represents current assets financed from long-term capital sources that do not require near-term repayment.,Working Capital,P 3,This ratio measures the short-term debt-paying ability of the company.,Current Ratio,P 3,Quick assets are Cash, Short-Te
12、rm Investments, and Current Receivables.,This ratio is like the current ratio but excludes current assets such as inventories and prepaid expenses that may be difficult to quickly convert into cash.,Acid-Test Ratio,P 3,This ratio measures how many times a company converts its receivables into cash e
13、ach year.,Accounts Receivable Turnover,P 3,This ratio measures the number of times merchandise is sold and and replaced during the year.,Inventory Turnover,P 3,This ratio measures the liquidity of receivables.,Days Sales Uncollected,=,Ending Accounts Receivable Net Sales, 365,Days Sales Uncollected,
14、=,$20,000 $494,000, 365 = 14.8 days,Days Sales Uncollected,P 3,This ratio measures the liquidity of inventory.,Days Sales in Inventory,P3,This ratio measures the efficiency of assets in producing sales.,Total Asset Turnover,P 3,Debt Ratio,Equity Ratio,Pledged Assets to Secured Liabilities,Times Inte
15、rest Earned,Solvency,P 3,Use this information to calculate the solvency ratios for Norton Corporation.,Solvency,P 3,This ratio measures what portion of a companys assets are contributed by creditors.,Debt Ratio,P 3,This ratio measures what portion of a companys assets are contributed by owners.,Equi
16、ty Ratio,P 3,This ratio measures the solvency of companies.,Debt-to-Equity Ratio,P 3,This is the most common measure of the ability of a firms operations to provide protection to the long-term creditor.,Times Interest Earned,P 3,Profit Margin,Gross Margin,Return on Total Assets,Basic Earnings per Sh
17、are,Book Value per Common Share,Return on Common Stockholders Equity,Profitability,P 3,Use this information to calculate the profitability ratios for Norton Corporation.,Profitability,P 3,This ratio describes a companys ability to earn a net income from sales.,Profit Margin,P 3,This ratio measures t
18、he amount remaining from $1 in sales that is left to cover operating expenses and a profit after considering cost of sales.,Gross Margin,P 3,This ratio is generally considered the best overall measure of a companys profitability.,Return on Total Assets,P 3,This measure indicates how well the company
19、 employed the owners investments to earn income.,Return on Common Stockholders Equity,P 3,This ratio measures liquidation at reported amounts.,Book Value per Common Share,P 3,This measure indicates how much income was earned for each share of common stock outstanding.,Basic Earnings per Share(可能要考),
20、P 3,Price-Earnings Ratio,Dividend Yield,Market Prospects,P 3,Use this information to calculate the market ratios for Norton Corporation.,Market Prospects,P 3,This measure is often used by investors as a general guideline in gauging stock values. Generally, the higher the price-earnings ratio, the mo
21、re opportunity a company has for growth.,Price-Earnings Ratio,P 3,This ratio identifies the return, in terms of cash dividends, on the current market price of the stock.,Dividend Yield,P 3,Net Income,Reporting Income and Equity,Discontinued Segments,Changes in Accounting Principles,Extraordinary Ite
22、ms,Continuing Operations,A 2,Revenues, expenses and income generated by the companys continuing operations.,Continuing Operations,Continuing Operations,Net Income,A 2,Income from operating the discontinued segment prior to its disposal and gain or loss on the sale of the net assets of the segment.,D
23、iscontinued Segments,Discontinued Segments,Net Income,A 2,A gain or loss that is unusual in nature and infrequent in occurrence.,Extraordinary Items,Extraordinary Items,Net Income,A 2,The increase or decrease in income when changing from one generally accepted accounting principle to another.,Changes in Accounting Principles,Changes in Accounting Principles,Net Income,A 2,Income Statement,A 2,End of Chapter 17,
