WORKING WITH FINANCIAL STATEMENTS

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WORKING WITH FINANCIAL STATEMENTS
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FINANCIAL STATEMENT ANALYSIS

• History lesson
• Purpose
• The Financial Dimensions approach

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FINANCIAL STATEMENT ANALYSIS

• Firm Financial Dimensions
• Liquidity/Short-Term Solvency
• Asset Management/Mgl Effectiveness
• Debt Mgmt./Long-Term Solvency
• Profitability/Expense Control
• Market Value/Value Creation

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FINANCIAL STATEMENT ANALYSIS

• Liquidity/Short-Term Solvency
• Current ratio
• Quick ratio
• Cash ratio

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FINANCIAL STATEMENT ANALYSIS

• Asset Mgmt./Managerial Effectiveness
• Inventory turnover
• Days sales in inventory
• Days sales in receivables
• Fixed asset turnover
• Total asset turnover

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FINANCIAL STATEMENT ANALYSIS

• Debt Management/Long-Term Solvency
• Total debt ratio
• Debt-to-equity ratio
• Times interest earned
• Cash coverage

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FINANCIAL STATEMENT ANALYSIS

• Profitability/Expense Control
• Profit margin
• ROA (ROI)
• ROE
• The DuPont identity

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FINANCIAL STATEMENT ANALYSIS

• Market Value/Value Creation
• Market capitalization (market cap)
• Price/Earnings ratio (P/E)
• Market-to-book ratio (M/B)

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QD ANALYSIS EXERCISE YAHOO!

• Yahoo.com

What is Yahoos market cap? How liquid is the
firm? How indebted is the firm? How profitable is
the firm? How well has management utilized the
firms assets? What is the markets assessment of
the firm?
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QD ANALYSIS EXERCISE YAHOO!
What is Yahoos market cap? How liquid is the
firm? How indebted is the firm? How
profitable is the firm? How well has management
utilized assets? What is the markets
assessment of the firm?