Chapter Three. Working With Financial Statements. Prepared by Anne Inglis, Ryerson University. Key Concepts and Skills. Understand sources and uses of cash and the Statement of Cash Flows Know how to standardize financial statements for comparison purposesBy preston-nunez
Working With Financial Statements. 3. Prepared by Anne Inglis, Ryerson University. Key Concepts and Skills. Understand sources and uses of cash and the Statement of Cash Flows Know how to standardize financial statements for comparison purposesBy natalie-sloan
Chapter Three. Working With Financial Statements. Key Concepts and Skills. Understand sources and uses of cash and the Statement of Cash Flows Know how to standardize financial statements for comparison purposes Know how to compute and interpret important financial ratiosBy paul-tyler
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FINANCIAL RATIOS. USED TO MEASURE PERFORMANCE OF BUSINESS TO INDUSTRY OR ESTABLISHED RESULT – IT IS IRRELEVANT IF ANALYSED ON IT’S OWN – OBJECTIVE LOOK – ENVIRONMENT, CLIMATE, ECONOMY ETC. USED BY CREDITORS, OWNERS, STOCK HOLDERS, MANAGEMENT – TRICKS TO MAKE RATIOS LOOK GOOD. RATIOS.
Financial Ratios. Lecture 6 This lecture is part of Chapter 3: Evaluating a Company’s Performance. Today’s Lecture. Liquidity Ratios Efficiency Ratios Leverage Ratios Profitability Ratios. Liquidity Ratios. Liquidity is a measure of how quickly an asset can be converted to cash.
Financial Ratios Clicker Quiz Market Price Per Share Earnings Per Share A. Inventory Turnover B. Accounts Receivable Turnover C. Price Earnings Ratio D. Debt to Equity What is this ratio? Public’s confidence in the future growth of the company Price Earnings Ratio Total Liabilities
Financial Ratios. Overview. Levels of information The power of ratios A context for using ratios Different perspectives Published v. Management Accounts Classifying and exploring commonly used ratios Practice. Levels of information. Not easily obtained for private companies. Comparison.
FINANCIAL RATIOS. Making sense of Revenue Statements And Balance Sheets. Introduction. Financial ratios are calculations that help managers examine the performance of the business. They also assist in determining whether the business is meeting its financial objectives.
FINANCIAL RATIOS. FOUR BASIC TYPES List the most commonly used in each category LIQUIDITY Current ratio = Current Assets / Current Liabilities, Quick ratio = (Current Assets - Inventory) / Current Liabilities, Cash ratio = Cash / Current Liabilities. MANAGEMENT SKILL
Steve Paulone Facilitator. Financial Ratios. Things to consider concerning financial ratios:. A ratio by itself means very little – you need to compare that result with: a prior period history competitor company results or with industry averages
Financial Ratios. Ratio Analysis. Measure firm performance Compare over time Compare with other firms or industries Analyze ROE Project financial statements into future. Ratios. Profitability Activity or Utilization Liquidity Leverage Growth Valuation. Profitability Ratios.
2. Standardized Financial Statements. Common-Size Balance SheetsCompute all accounts as a percent of total assetsCommon-Size Income StatementsCompute all line items as a percent of salesStandardized statements make it easier to compare financial information, particularly as the company growsThe