韩山师范学院财务管理课件第三章 Financial Analysis.ppt

Chapter 3 Financial Analysis Classification System Profitability Ratios Saxton Company Industry Average 1. Profit margin = = 5% 6.7% 2. Return on assets (investment) = a. = 12.5% 10% b. 5% ? 2.5 = 12.5% 6.7% ? 1.5 = 10% 3. Return on equity = a. = 20% 15% b. = 20% = 15% Asset Utilization Ratios Liquidity Ratios Saxton Company Industry Average 9. Current ratio = = 2.67 2.1 10. Quick ratio = = 1.43 1.0 Debt Utilization Ratios Chapter 3 - Outline LT 3-1 Financial Analysis 4 Categories of Financial Ratios Importance of Ratios Inflation and its Impact on Profits Financial Analysis and Ratios LT 3-2 What is financial analysis? Evaluating a firm’s financial performance Analyzing ratios or numerical calculations Comparing a company to its industry 4 Categories of Ratios LT 3-3 Profitability Ratios Asset Utilization Ratios Liquidity Ratios Debt Utilization Ratios Profitability Ratios LT 3-4 Show how profitable a company is. The ratios express: — Profit Margin or Return on Sales (%) — Return on Assets or Return on Investment (%) — Return on Equity (%) Asset Utilization Ratios LT 3-5 Show how effectively a company uses its assets. The ratios express: — Receivables Turnover (times) — Average Collection Period (days) — Inventory Turnover (times) — Fixed Asset Turnover (times) — Total Asset Turnover (times) Profitability and Turnover Ratios LT 3-6 Remember: Return on X = Net Income / X X Turnover = Sales / X Liquidity Ratios LT 3-7 Show how liquid a company is or how much $ it has to meet S/T needs. The ratios express: —Current Ratio (times) —Quick Ratio or Acid-Test Ratio (times) Debt Utilization Ratios LT 3-8 Show how well a company is managing or using debt. The ratios express: —Debt-to-Total Assets (%) —Times Interest Earned (times) —Fixed Charge Coverage (times)