《财务管理专业英语》教学课件04.pptVIP

USES AND LIMITATIONS OF FINANCIAL RATIO ANALYSIS while ratio analysis can provide useful information concerning a company’s operations and financial condition, it does have limitations that necessitate care and judgment. 4.1 Financial Ratio Analysis 4.2 Liquidity Ratios 4.3 Debt Management Ratios 4.4 Asset Management Ratios 4.5 Profitability Ratios 4.6 Market Value Ratios 4.7 Uses and Limitations of Financial Ratio Analysis FINANCIAL RATIO ANALYSIS A financial ratio is a mathematical relationship among several numbers often stated in the form of percentage, times, or days. Analyzing Financial Ratios Financial ratios are not standardized. Analyzing a single financial ratio for a given year may not be very useful. Some of a firm’s financial accounting practices or choices will affect its financial statements and, finally, its financial ratios. Financial ratios do not provide analysts with all of the answers about a firm’s condition. LIQUIDITY RATIOS Liquidity ratios indicate a firm’s ability to pay its obligations in the short run. Current ratio LIQUIDITY RATIOS Quick ratio Cash ratio DEBT MANAGEMENT RATIOS Debt management ratios characterize a firm in terms of the relative mix of debt and equity financing and provide measures of the long-term debt paying ability of the firm. Debt ratio Debt?to?equity ratio Equity multiplier DEBT MANAGEMENT RATIOS Debt management ratios characterize a firm in terms of the relative mix of debt and equity financing and provide measures of the long-term debt paying ability of the firm. Debt ratio Debt?to?equity ratio Equity multiplier DEBT MANAGEMENT RATIOS Long-term Debt Ratio Interest Coverage Ratio DEBT MANAGEMENT RATIOS Cash Flow Coverage Ratio ASSET MANAGEMENT RATIOS Asset management ratios, also referred to as asset utilization or asset efficiency ratios, measure a firm’s ability to manage the assets at its disposal. Accounts Receivable Turnover R