财务会计英语-unit9-Analyzing-Financial-Statements课件.ppt

《财务会计英语-unit9-Analyzing-Financial-Statements课件.ppt》由会员分享，可在线阅读，更多相关《财务会计英语-unit9-Analyzing-Financial-Statements课件.ppt（53页珍藏版）》请在淘文阁 - 分享文档赚钱的网站上搜索。

1、LOGOAnalyzing Financial StatementsUnit 9Financial Accounting English(Second Edition)Financial Accounting English(Second Edition)ContentsSection 1 Purpose of Financial Statement AnalysisSection 2 Horizontal AnalysisSection 3 Vertical AnalysisSection 4 Ratio AnalysisFinancial Accounting English(Second

2、 Edition)Section 1Purpose of Financial Statement Analysis The internal users of accounting information are managing executives and administrators in the company.External users are those who are not directly involved in operating the company.Financial Accounting English(Second Edition)Section 2Horizo

3、ntal Analysis(水平分析水平分析)Horizontal analysis compares amounts for two or more successive periods.It involves the left-to-right movement of our eyes as we view comparative financial statements.Horizontal analysis begins with the computation of changes from the previous year to the current year in both

4、dollar amounts and percentages.Financial Accounting English(Second Edition)Financial Accounting English(Second Edition)In the formula,analysis period is the point of time under analysis,and base period is the point of time used for comparison.Often the previous year is used as the base period.Sectio

5、n 2Horizontal Analysis(水平分析水平分析)Financial Accounting English(Second Edition)We compute the percent change by dividing the dollar change by the base period amount and then multiplying this quantity by 100:Section 2Horizontal Analysis(水平分析水平分析)Financial Accounting English(Second Edition)2.2 Example of

6、 dollar changes and percent changes An example of dollar and percent changes is given in the form of comparative financial statements for Lott Law Firm.In Example 1.4 and 1.5,Unit One and Example 4.3,Unit Four,we showed two financial statements for Lott Law Firm for its January and February operatio

7、ns.Example 9.1Section 2Horizontal Analysis(水平分析水平分析)Financial Accounting English(Second Edition)Financial Accounting English(Second Edition)3.1 Common-size statements(百分比报表)Section 3Vertical Analysis(垂直分析垂直分析)Financial Accounting English(Second Edition)3.2 Example of common-size financial statements

8、(百分比财务报表实例)Example of common-size balance sheet(百分比资产负债表实例)Example 9.2 shows a common-size comparative balance sheet(百分比比较资 产负债表)for Lott Law Firm.Example 9.2Section 3Vertical Analysis(垂直分析垂直分析)Financial Accounting English(Second Edition)Financial Accounting English(Second Edition)Section 3Vertical

9、Analysis(垂直分析垂直分析)Financial Accounting English(Second Edition)Financial Accounting English(Second Edition)9.5 Vertical analysis involves the _ movement of our eyes as we review common size financial statements.9.6 Common-size statements show the of the _ parts to the total.A common-size percent is c

10、alculated by taking each individual financial statement amount under analysis and dividing it by its _ amount.up-downpercentagesbaseExercisesFinancial Accounting English(Second Edition)9.7 Use horizontal analysis to compute the amount and percentage changes for the income statement below,with the ye

11、ar 2006as the analysis period.(Round the percentage changes to one decimal place.)ExercisesFinancial Accounting English(Second Edition)Financial Accounting English(Second Edition)ExercisesFinancial Accounting English(Second Edition)9.8 Use vertical analysis to express the comparative balance sheet.(

12、Round computations to one decimal place.)ExercisesFinancial Accounting English(Second Edition)ExercisesFinancial Accounting English(Second Edition)ExercisesFinancial Accounting English(Second Edition)Section 4Ratio Analysis(比率分析比率分析)4.1 Liquidity and efficiency ratios(流动比率和效率比率)Liquidity refers to a

13、 companys ability to meet short-term or unexpected cash needs.Efficiency refers to how productive a company is in using its assets.Financial Accounting English(Second Edition)Financial Accounting English(Second Edition)Taken from Example 9.1,the current ratios for Lott Law Firm are:Section 4Ratio An

14、alysis(比率分析比率分析)Financial Accounting English(Second Edition)Referred to Example 8.1,Unit Eight,the current ratio for Whitman Company is:Section 4Ratio Analysis(比率分析比率分析)Financial Accounting English(Second Edition)Acid-test ratio(速动比率)Acid-test ratio,also called quick ratio(速动比率)is used to measure sh

15、ort-term debt-paying ability.The acid-test ratio is computed as:Section 4Ratio Analysis(比率分析比率分析)Financial Accounting English(Second Edition)Financial Accounting English(Second Edition)Section 4Ratio Analysis(比率分析比率分析)Financial Accounting English(Second Edition)Referred to Example 8.1,Unit Eight,the

16、 acid-test ratio for Whitman Company is:Section 4Ratio Analysis(比率分析比率分析)Financial Accounting English(Second Edition)Financial Accounting English(Second Edition)For Whitman Company there is only one accounting period,so we can get nowhere the average accounts receivable.Nor there are accounts receiv

17、able amounts for Lott Law Firm.So lets take MKs 2006 and 2007 financial data for illustration.See Exhibit 9-1Section 4Ratio Analysis(比率分析比率分析)Financial Accounting English(Second Edition)With these data,MKs 2007 accounts receivable turnover is computed as:Section 4Ratio Analysis(比率分析比率分析)Financial Ac

18、counting English(Second Edition)Average days sales uncollected(应收账款平均回收天数)This ratio measures the average time taken to collect receivables.It is computed as(using the information in Exhibit 9-1):Section 4Ratio Analysis(比率分析比率分析)Financial Accounting English(Second Edition)Inventory turnover(存货周转率)It

19、 is calculated with the following formula:Section 4Ratio Analysis(比率分析比率分析)Financial Accounting English(Second Edition)Average days inventory on hand(存货平均周转天数)This ratio measures the average days taken to sell inventory.Following the above-mentioned,average days inventory on hand for MK is calculate

20、d as follows:Section 4Ratio Analysis(比率分析比率分析)Financial Accounting English(Second Edition)This formula estimates that MKs inventory will be turned into receivables(or cash)in 76 days,which is not considered quite fast.Section 4Ratio Analysis(比率分析比率分析)Financial Accounting English(Second Edition)Total

21、 assets turnover(总资产周转率)describes the ability of a company to use its assets to generate sales.It is calculated with:Section 4Ratio Analysis(比率分析比率分析)Financial Accounting English(Second Edition)The usual practice of averaging total assets is to add up both the beginning and ending assets of an accou

22、nting period and divide the total by two.Taking the information from the above Exhibit 9-1,this ratio is computed as:Section 4Ratio Analysis(比率分析比率分析)Financial Accounting English(Second Edition)4.2 Solvency ratios(偿债能力比率)Solvency refers to a companys long-run financial ability to cover long-term obl

23、igations.Analysis of capital structure is the key point in evaluating solvency.Debt ratio(负债比率)This ratio assesses the portion of assets contributed by owners and the portion contributed by creditors.Section 4Ratio Analysis(比率分析比率分析)Financial Accounting English(Second Edition)Taken the information f

24、rom Example 8.1,the debt ratio for Whitman Company is calculated as:Section 4Ratio Analysis(比率分析比率分析)Financial Accounting English(Second Edition)Equity ratio(股东权益比率)The equity ratio expresses the total owners equity as a percent of total assets.Taken the information from Example 8.1,the equity ratio

25、 is calculated as follows:Section 4Ratio Analysis(比率分析比率分析)Financial Accounting English(Second Edition)Whitmans financial statements reflect less debt(17%)than equity(83%).Also,current liabilities($135,400)are less than long-term debt($324,000).Accompany is considered less risky if its capital struc

26、ture(equity and long-term debt)is made up of more equity than debts.Section 4Ratio Analysis(比率分析比率分析)Financial Accounting English(Second Edition)4.3 Profitability ratios(盈利比率)Profitability refers to a companys ability to produce profits.Net profit margin(净利率)Net profit margin reflects a companys abi

27、lity to earn a net income from sales.It is calculated in the formula as follows:Section 4Ratio Analysis(比率分析比率分析)Financial Accounting English(Second Edition)Taking the information from Example 8.2,we calculate Whitmans profit margin as follows:Considering the industry in which a company operates,pro

28、fit margin ratio of 19.7%for a hardware store is very high,for in a retail supermarket a profit margin of 2%is quite normal.Section 4Ratio Analysis(比率分析比率分析)Financial Accounting English(Second Edition)Return on total assets(总资产收益率)This ratio measures the overall earning power or profitability of a c

29、ompany.It is calculated in the formula as below:Section 4Ratio Analysis(比率分析比率分析)Financial Accounting English(Second Edition)Taken the information in Exhibit 9-1,MKs 2007 return on total assets is:The 17.1%return on total assets is favorable compared to most businesses.Section 4Ratio Analysis(比率分析比率

30、分析)Financial Accounting English(Second Edition)Exercises9.9 The usefulness of ratios depends on _,which is the most challenging aspect of ratio analysis.9.10 Liquidity refers to a companys ability to meet _ or _ cash needs.9.11 Efficiency refers to how _ a company is in using its assets.skillful int

31、erpretationshort-termunexpectedproductiveFinancial Accounting English(Second Edition)9.12 Using the information in Exercise 9.8,calculate the current ratio for Longman Works,Inc.in year 2006.ExercisesFinancial Accounting English(Second Edition)9.13 Using the information in Exhibit 9-1,calculate the

32、acid-test ratio for MK in the year 2007 and 2006.ExercisesFinancial Accounting English(Second Edition)9.14 Using the information in Exhibit 9-1,calculate the debt ratio for MK in the year 1997.ExercisesFinancial Accounting English(Second Edition)9.15 Using the information in Example 9.1,calculate the profit margin for Lott Law Firm in February and January.ExercisesFinancial Accounting English(Second Edition)Relevant Terms relevant termsLOGOFinancial Accounting English(Second Edition)