Bài giảng Fundamental Financial Accounting Concepts - Chapter 13: Financial Statement Analysis

Chapter Thirteen Financial Statement AnalysisMcGraw-Hill/IrwinMcGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.Factors in Communicating Useful InformationUsersTypes of DecisionsInformation AnalysisThe primary objective of accounting is to provide information useful for decision making. To provide information that supports this objective, accountants must consider the following: 13-*Methods of AnalysisHorizontal AnalysisVertical AnalysisRatio Analysis13-*Horizontal Analysis Horizontal analysis (or trend analysis) refers to studying the behavior of individual financial statement items over several accounting periods. Absolute AmountsPercentage Analysis13-*Milavec Company Horizontal Analysis2012201113-*Vertical AnalysisVertical analysis uses percentages to compare individual components of financial statements to a key statement figure. A common-size financial statement is a vertical analysis in which each financial statement item is expressed as a percentage. 13-*Vertical Analysis of Income StatementIn income statements, all items are usually expressed as a percentage of sales. 13-*Milavec Company Vertical Analysis2012201113-*Vertical Analysis of Balance SheetIn balance sheets, all items are usually expressed as a percentage of total assets. 13-*Ratio AnalysisRatio analysis involves studying various relationships between different items reported in a set of financial statements. 13-*Liquidity RatiosLiquidity ratios indicate a company’s ability to pay short-term debts. They focus on current assets and current liabilities.Working capitalCurrent ratioQuick ratioAccounts receivable ratiosInventory ratios13-*Solvency RatiosSolvency ratios are used to analyze a company’s long-term debt-paying ability and its financing structure.Debt to assets ratioDebt to equity ratioNumber of times interest earnedPlant assets to long-term liabilities13-*Profitability RatiosProfitability ratios measure a company’s ability to generate earnings.Net margin (or return on sales)Asset turnover ratioReturn on investmentReturn on equity13-*Stock Market RatiosStock market ratios analyze the earnings and dividends of a company.Earnings per shareBook value per sharePrice-earnings (P E) ratioDividend yield13-*Limitations of Financial Statement AnalysisDifferent IndustriesChanging Economic EnvironmentAccounting Principles13-*End of Chapter Thirteen13-*