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Understanding Financial Reports and Ratios for Effective Corporate Finance Management

Learn to analyze balance sheets, cash flow statements, and profitability ratios for informed decision-making in corporate finance. Gain insights into asset utilization, liquidity, and debt utilization ratios. Delve into Du Pont analysis and trend analysis.

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Understanding Financial Reports and Ratios for Effective Corporate Finance Management

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  1. Corporate Finance A1 Vysokáškolafinanční a správní Summer Semester 2012 Jaromír R. Stemberg jaromir@mail.vsfs.cz

  2. Financial Reports

  3. Balance Sheet AssetsLiabilities Current Assets Current Liabilities Cash and Equivalents Short-Term Accounts Payable Short-Term ReceivablesCurrent Tax Payable Inventory Short-Term Loans and Borrowings Accruals and Other S/T Assets Accruals and Other S/T Liabilities Long-Term AssetsLong-Term Liabilities Intangible Fixed Assets Long-Term Payables • Tangible Fixed AssetsProvisions • Long-Term Receivables • Owners’ Equity Share Capital Share Premium and Capital Funds Retained Earnings Y-T-D Profit (Loss)

  4. Cash FlowStatement

  5. StatementofChanges in Equity

  6. Profitability Ratios • Profit margin • Return on assets(investments) • Return on equity

  7. Profit Margin Net income / Sales = 200 / 4 000 = 5%

  8. Return on Assets Net income / Totalassets = 200 / 1 600 = 12,5%

  9. Return on Equity Net income / Stockholders‘ equity = 200 / 1 000 = 20%

  10. AssetUtilizationRatios • Receivableturnover • Averagecollection period • Inventoryturnover • Fixedassetturnover • Totalassetturnover

  11. ReceivableTurnover Sales / Accountsreceivable = 4 000 / 350 = 11,4 times

  12. AverageCollection Period Accountsreceivable / (Sales / 365) = 350 / 11 = 32 days

  13. FixedAssetsTurnover Sales / FixedAssets = 4 000 / 800 = 5 times

  14. TotalAssetsTurnover Sales / Totalassets = 4 000 / 1 600 = 2,5 times

  15. Inventury Turnover Sales / FixedAssets = 4 000 / 800 = 5 times

  16. LiquidityRatios • Current ratio • Quick ratio

  17. Current Ratio Currentassets / Currentliabilities = 800 / 300 = 2,67

  18. Quick Ratio (Currentassets - Inventory) / Currentliabilities = 430 / 300 = 1,43

  19. DebtutilizationRatios • Debt to totalassets • Timesinterestearned

  20. Debt to TotalAssets Totaldebt / Totalassets = 600 / 1 600 = 37,5%

  21. TimesInterestEarned EBIT / Interest = 550 / 50 = 11 times

  22. Du Pont Analysis

  23. Trend Analysis

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