Financial statement Analysis
Financial Statement Analysis
Main contents .o The maior financial statements 8 Standard financial ratios .o Ratio decomposition analysis Asset utilization ratios s Comparability problems ss Accounting V.S. Economic earnings y
Main Contents ❖ The major financial statements ❖ Standard financial ratios ❖ Ratio decomposition analysis ❖ Asset utilization ratios ❖ Comparability problems ❖ Accounting v.s. Economic earnings
The Major Financial Statements Accounting data are useful in assessing the t a economic prospects of the firm. An investor can use financial data as inputs into stock analysis and estimate the intrinsic value of common stocks 8. There are three basic sources of data The income statement The balance sheet The statement of cash flows
The Major Financial Statements ❖ Accounting data are useful in assessing the economic prospects of the firm. – An investor can use financial data as inputs into stock analysis and estimate the intrinsic value of common stocks. ❖ There are three basic sources of data: – The income statement – The balance sheet – The statement of cash flows
The Major Financial Statements ☆ The income statement Table Is a summary of the profitability of the firm over a period of time such as a year. Some terms Revenue, expense, net earning or profit Cost of goods sold, general and administrative expense, interest expense, tax on earnings Operating revenue, operating cost, operating income, earning before interest taxes (EBIT)
The Major Financial Statements ❖ The income statement – Table – Is a summary of the profitability of the firm over a period of time such as a year. – Some terms • Revenue, expense, net earning or profit • Cost of goods sold, general and administrative expense, interest expense, tax on earnings • Operating revenue, operating cost, operating income, earning before interest & taxes (EBIT)
The Major Financial Statements The balance sheet Table Provide a snapshot of the financial condition of the firm at a particular time. Some terms. Asset, liability, net worth or stockholder's equity Current asset, long-term asset Current liability, long-term debt Par value of stock, capital surplus(additional paid-in capital), retained earnings
The Major Financial Statements ❖ The balance sheet – Table – Provide a snapshot of the financial condition of the firm at a particular time. – Some terms: • Asset, liability, net worth or stockholder’s equity • Current asset, long-term asset • Current liability, long-term debt • Par value of stock, capital surplus(additional paid-in capital), retained earnings