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GET RICH QUICK CO.

GET RICH QUICK CO. Financial Statement Ratio Analysis: Profitability Long-Term Financial Position Short-Term Financial Position. Basics of FSA. These ratios do not exist in a vacuum By themselves, they do not provide much meaning They need to be compared to something: Trends over time

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GET RICH QUICK CO.

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  1. GET RICH QUICK CO. Financial Statement Ratio Analysis: Profitability Long-Term Financial Position Short-Term Financial Position

  2. Basics of FSA • These ratios do not exist in a vacuum • By themselves, they do not provide much meaning • They need to be compared to something: • Trends over time • Key competitors • Industry averages

  3. PROFITABILITYEARNINGS PER SHARE

  4. PROFITABILITYEARNINGS PER SHARE Net Income – Preferred Dividends

  5. PROFITABILITYEARNINGS PER SHARE Net Income – Preferred Dividends Number of Common Shares Outstanding

  6. PROFITABILITYEARNINGS PER SHARE Net Income – Preferred Dividends Number of Common Shares Outstanding $180,000- 0

  7. PROFITABILITYEARNINGS PER SHARE Net Income – Preferred Dividends Number of Common Shares Outstanding $180,000 - 0 100,000 shares

  8. PROFITABILITYEARNINGS PER SHARE Net Income – Preferred Dividends Number of Common Shares Outstanding $180,000 - 0 = $1.80 100,000 shares

  9. PROFITABLITYPRICE/EARNINGS RATIO

  10. PROFITABLITYPRICE/EARNINGS RATIO Market Price per Share

  11. PROFITABLITYPRICE/EARNINGS RATIO Market Price per Share Earnings per Share

  12. PROFITABLITYPRICE/EARNINGS RATIO Market Price per Share Earnings per Share $18.00

  13. PROFITABLITYPRICE/EARNINGS RATIO Market Price per Share Earnings per Share $18.00 $1.80

  14. PROFITABLITYPRICE/EARNINGS RATIO Market Price per Share Earnings per Share $18.00 = 10 $1.80

  15. PROFITABILITYRETURN ON ASSETS

  16. PROFITABILITYRETURN ON ASSETS (Income + Interest Exp.) X Sales Sales Assets

  17. PROFITABILITYRETURN ON ASSETS (Income + Interest Exp.) X Sales Sales Assets (Operating Margin) X (Asset Turnover)

  18. PROFITABILITYRETURN ON ASSETS (Income + Interest Exp.) X Sales Sales Assets (Profit Margin) X (Asset Turnover) ($180,000+30,000) $3,000,000

  19. PROFITABILITYRETURN ON ASSETS (Income + Interest Exp.) X Sales Sales Assets (operating Margin) X (Asset Turnover) $180,000+30,000 X $3,000,000 = 13% $3,000,000 $1,620,000

  20. PROFITABILITYRETURN ON EQUITY

  21. PROFITABILITYRETURN ON EQUITY Net Income

  22. PROFITABILITYRETURN ON EQUITY Net Income Stockholders’ Equity

  23. PROFITABILITYRETURN ON EQUITY Net Income Stockholders’ Equity $180,000

  24. PROFITABILITYRETURN ON EQUITY Net Income Stockholders’ Equity $180,000 $1,080,000

  25. PROFITABILITYRETURN ON EQUITY Net Income Stockholders’ Equity $180,000 = 16.7% $1,080,000

  26. LONG-TERM FIN. CONDITIONRATIO OF DEBT TO ASSETS

  27. LONG-TERM FIN. CONDITIONRATIO OF DEBT TO ASSETS Liabilities

  28. LONG-TERM FIN. CONDITIONRATIO OF DEBT TO ASSETS Liabilities Assets

  29. LONG-TERM FIN. CONDITIONRATIO OF DEBT TO ASSETS Liabilities Assets $540,000

  30. LONG-TERM FIN. CONDITIONRATIO OF DEBT TO ASSETS Liabilities Assets $540,000 $1,620,000

  31. LONG-TERM FIN. CONDITIONRATIO OF DEBT TO ASSETS Liabilities Assets $540,000 = 33.3% $1,620,000

  32. LONG-TERM FIN. CONDITIONRATIO OF EQUITY TO ASSETS

  33. LONG-TERM FIN. CONDITIONRATIO OF EQUITY TO ASSETS Stockholders’ Equity

  34. LONG-TERM FIN. CONDITIONRATIO OF EQUITY TO ASSETS Stockholders’ Equity Assets

  35. LONG-TERM FIN. CONDITIONRATIO OF EQUITY TO ASSETS Stockholders’ Equity Assets $1,080,000

  36. LONG-TERM FIN. CONDITIONRATIO OF EQUITY TO ASSETS Stockholders’ Equity Assets $1,080,000 $1,620,000

  37. LONG-TERM FIN. CONDITIONRATIO OF EQUITY TO ASSETS Stockholders’ Equity Assets $1,080,000 = 66.7% $1,620,000

  38. CURRENT FIN. CONDITIONCURRENT RATIO

  39. CURRENT FIN. CONDITIONCURRENT RATIO Current Assets

  40. CURRENT FIN. CONDITIONCURRENT RATIO Current Assets Current Liabilities

  41. CURRENT FIN. CONDITIONCURRENT RATIO Current Assets Current Liabilities $280,000

  42. CURRENT FIN. CONDITIONCURRENT RATIO Current Assets Current Liabilities $280,000 $40,000

  43. CURRENT FIN. CONDITIONCURRENT RATIO Current Assets Current Liabilities $280,000 = 7 $40,000

  44. CURRENT FIN. CONDITIONQuick Ratio

  45. CURRENT FIN. CONDITIONQuick Ratio “Quick Assets”

  46. CURRENT FIN. CONDITIONQuick Ratio “Quick Assets” Current Liabilities

  47. CURRENT FIN. CONDITIONQuick Ratio “Quick Assets” Current Liabilities $200,000

  48. CURRENT FIN. CONDITIONQuick Ratio “Quick Assets” Current Liabilities $200,000 $40,000

  49. CURRENT FIN. CONDITIONQuick Ratio “Quick Assets” Current Liabilities $200,000 = 5 $40,000

  50. CURRENT FIN. CONDITIONAvg. Collection Period

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