parts of a financial statement 1.statement of income 2.balance sheet 3.statement of cash flow...
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Parts of a Financial Statement
1. Statement of Income
2. Balance Sheet
3. Statement of Cash Flow
4. Statement of Stockholders’ Equity
Basic Accounting Identity
Assets = Liabilities + Shareholder’s Equity
A = L + Sh Eq
4 Basic Types of Analysis
1. Operating or activity analysis
2. Liquidity analysis
3. Long Term and solvency analysis
4. Profitability analysis
Operating or activity analysis
1. Inventory a) Turnover
b) Inventory Period (IP)
2. Receivables a) Turnover
b) Collection Period (CP)
3. Payables a) Turnover
b) Payment Period (PP)
4. Assets Turnover
Sales Accounts Receivable
365 daysReceivables Turnover
Cost of goods soldPayables
Cost of goods soldInventory
365 daysInventory Turnover
Sales Assets
365 daysPayables Turnover
5. Cash Conversion Period IP + CP - PP
1. Current ratio
2. Quick Ratio
3. Cash Ratio
4. Net Working Capital to Assets
5. Interval measure
Current AssetsCurrent Liabilities
Current Assets - InventoryCurrent Liabilities
CashCurrent Liabilities
Net working CapitalTotal assets
Current AssetsAverage Daily Operating Costs
Liquidity Ratios
Long term and solvency analysis
1. Total Debt Ratios a) Total Debt
b) Debt/ Equity
c) Equity Multiplier
2. Times Interest Earned
3. Cash Coverage
LiabilitiesTotal Assets
LiabilitiesTotal Equity
Total AssetsTotal Equity
Earnings before Interest and Taxes (EBIT)Interest
EBIT + DepreciationInterest
Profitability Measures
1. Profit Margin
2. Return on Assets
3. Return on Equity (ROE)
4. Dupont Identity
Net IncomeSales
Net IncomeAssets
Net IncomeEquity
EBIT X EBI X Net Income X Sales X Assets = EBITEBI Net Income Sales Assets Equity
Equity Tax Interest Net Margin Asset Leverage Return Burden Burden Turnover on Equity
Financial Statement - XYZ CorporationCZK ,000
Short Term Assets Short Term Liabilities
Cash 100 Bank Loan 250Receivables 345 Payables 422Inventory 837 Total 672 Total 1,282
Long Term LiabilitiesLong Term Assets
LT Bank Loan 1,237 Machinery 2,574 Mortgage 946
Buildings 1,733 Total 2,183
Total 4,307 TOTAL LIABILITIES 2,855
Shareholders' EquityCapital Shares 2,000
TOTAL ASSETS 5,589 Retained Earnings 734
Total 2,734
TOTAL SHAREHOLDERS'EQUITY & LIABILITIES 5,589
Working capital – ST Assets – ST Liabilities
Working capital – 1,282 – 672 = 610
Profit and Loss Statement - XYX CorporationCZK '000
Revenues 2,289
Cost of Materials 545 Direct Manpower Costs 659 Indirect Costs 475 Total Cost Of Goods (1,679)
Gross Margin 610
Fixed Operating Costs (547)
Net Income 63
Operating or activity analysis
1. Inventory a) Turnover
b) Days’ sales in Inventory
2. Receivables a) Turnover
b) Collection Period
3. Payables a) Turnover
b) Payment Period
4. Assets Turnover
2,289 or345
365 days or 6.63
1,679 or422
1,679 or 872
365 days or 1.93
2,289 or5,589
1.93
189 days
6.63
55 days
3.97
2.44
5. Cash Conversion Period
365 days or 3.97
92 days
189 + 55 – 92 = 152 days
Liquidity Ratios
1. Current ratio
2. Quick Ratio
3. Cash Ratio
4. Net Working Capital to Assets
5. Interval measure
1,282672
445672
100672
1.91
.67
.14
6105,589
.11
1,2826.09
210
Long term and solvency analysis
1. Total Debt Ratios a) Total Debt
b) Debt/ Equity
c) Equity Multiplier
2,8555,589
2,8552,734
5,5892,734
.51
1.04
2.04
Profitability Measures
1. Profit Margin
2. Return on Assets
3. Return on Equity (ROE)
632,289
635589
632734
.03
.01
.02