4财务管理专业英语iyg.pptx

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1、山东轻工业学院商学院山东轻工业学院商学院4.Financial Ratio Analysis4.1 Financial Ratio Analysis 财务比率分析财务比率分析4.2 Liquidity Ratios 流动性比率流动性比率4.3 Debt Management Ratios 债务管理比率债务管理比率山东轻工业学院商学院山东轻工业学院商学院4.Financial Ratio Analysis4.4 Asset Management Ratios 资产管理比率资产管理比率4.5 Profitability Ratios 盈利比率盈利比率4.6 Market Value Ratios

2、市场价值比率市场价值比率山东轻工业学院商学院山东轻工业学院商学院4.Financial Ratio Analysis4.7 Uses and Limitations of Financial Ratio Analysis 财务比率分析的使用和限制财务比率分析的使用和限制山东轻工业学院商学院山东轻工业学院商学院Analyzing Financial RatiosoSome preliminary comments are warranted:1.Financial ratios are not standardized.山东轻工业学院商学院山东轻工业学院商学院Analyzing Financia

3、l Ratios2.Analyzing a single financial ratio for a given year may not be very useful.山东轻工业学院商学院山东轻工业学院商学院Analyzing Financial Ratios3.Some of a firms financial accounting practices or choices will affect its financial statements and,finally,its financial ratios.山东轻工业学院商学院山东轻工业学院商学院Analyzing Financial

4、 Ratios4.Financial ratios do not provide analysts with all of the answers about a firms condition.山东轻工业学院商学院山东轻工业学院商学院4.2 Liquidity RatiosoLiquidity ratios indicate a firms ability to pay its obligations in the short run.山东轻工业学院商学院山东轻工业学院商学院4.2 Liquidity RatiosoFinancial managers must pay close atte

5、ntion to liquidity ratios to ensure they reflect a high probability of the firm being able to promptly and fully pay its bills without undue stress.山东轻工业学院商学院山东轻工业学院商学院4.2 Liquidity RatiosoNet working capital to total assets ratio=Net working capital Total assetso净营运资本比总资产比率净营运资本比总资产比率山东轻工业学院商学院山东轻工

6、业学院商学院4.2.1 Current ratiooDenominator 分母分母 Numerator 分子分子山东轻工业学院商学院山东轻工业学院商学院4.2.1 Current ratiooFor example,a current ratio of 1.5 implies that a firm has$1.5 in current assets for every$1 in current liabilities and thus has 1.5 times the current assets,or has its current liabilities covered 1.5 ti

7、mes over.山东轻工业学院商学院山东轻工业学院商学院4.2.1 Current ratiooExcessively high current ratios,however,may indicated a firm may have too much of its long-term investor-supplied capital invested in short-term low-earning current assets.山东轻工业学院商学院山东轻工业学院商学院4.2.1 Current ratiooIn an inflationary environment,firms th

8、at use last-in,first-out(LIFO)inventory valuation will likely have lower current ratios than firms that use first-in,first-out(FIFO).山东轻工业学院商学院山东轻工业学院商学院4.2.1 Current ratiooWith LIFO inventory valuation,firms determine the value of cost of goods sold on the income statement by the cost of the invent

9、ory most recently produced;山东轻工业学院商学院山东轻工业学院商学院4.2.1 Current ratiooExcept in some declining cost industries,inflation will likely cause the value of this“older”inventory carried on the balance sheet to be less than the more recent cost of producing that inventory.山东轻工业学院商学院山东轻工业学院商学院4.2.1 Current ra

10、tiooThe value of inventory reported on the balance sheet is from more recent periods and will be based on more recent(higher)cost data than the inventory balance of similar firms that use LIFO.山东轻工业学院商学院山东轻工业学院商学院4.2.1 Current ratiooYet,if a firm has a current ratio that is less than one,the same tr

11、ansaction would lead to a lower current ratio.山东轻工业学院商学院山东轻工业学院商学院4.2.1 Current ratiooEqual absolute changes in the numerator and denominator may lead to apparent improvements or deterioration in ratios that do not reflect real changes in performance.山东轻工业学院商学院山东轻工业学院商学院4.2.1 Current ratiooAnalysts

12、should be aware that a firms managers may undertake year-end transactions,such as the one described above,to make certain ratios appear better following a period of disappointing performance.山东轻工业学院商学院山东轻工业学院商学院4.2.1 Current ratiooOne of the firms may have a substantial portion of its current assets

13、 tied up in inventories,while the other firm may have large cash and marketable securities.山东轻工业学院商学院山东轻工业学院商学院Latter oDid he walk or swim?The latter seems unlikely.山东轻工业学院商学院山东轻工业学院商学院4.2.1 Current ratiooManagers or analysts can examine a firms common-size balance sheet over time to see relative ch

14、anges in the composition of both current assets and current liabilities and assess changes or differences in liquidity.山东轻工业学院商学院山东轻工业学院商学院4.2.2 Quick ratio山东轻工业学院商学院山东轻工业学院商学院4.2.2 Quick ratiooThe rationale for excluding inventory is that it is the least liquid of a firms current assets and may not

15、 be as readily available to meet a short-term maturing obligation as the other more liquid current assets.山东轻工业学院商学院山东轻工业学院商学院4.2.2 Quick ratiooFor any firm carrying an inventory balance,the quick ratio will be lower than the current ratio.oFor example,suppose a firms current ratio has been fairly s

16、table and consistent with industry averages over the past three years.But during the same period,the firms quick ratio has declined and is now below industry averages.山东轻工业学院商学院山东轻工业学院商学院4.2.2 Quick ratiooWhether the increase is likely temporary or permanentoHow the firm finances the inventoryoHow t

17、he relative increases in inventory will affect the firms liquidity and overall performance山东轻工业学院商学院山东轻工业学院商学院4.2.3 Cash ratio山东轻工业学院商学院山东轻工业学院商学院4.2.3 Cash ratiooAnalyzing a cash ratio,however,could be helpful for assessing a firms liquidity when the firm needs to pay most or all of its current lia

18、bilities with cash in the near term.山东轻工业学院商学院山东轻工业学院商学院4.3 Debt Management RatiosoDebt management ratios characterize a firm in terms of the relative mix of debt and equity financing and provide measures of the long-term debt paying ability of the firm.山东轻工业学院商学院山东轻工业学院商学院4.3 Debt Management Ratios

19、oLeverage ratios:32山东轻工业学院商学院山东轻工业学院商学院4.3 Debt Management RatiosoCoverage ratios:33山东轻工业学院商学院山东轻工业学院商学院4.3.1 Debt RatiooCreditor prefer a low of moderate debt ratio because it provides more protection if the firm experiences financial problems.山东轻工业学院商学院山东轻工业学院商学院4.3.1 Debt Ratio35山东轻工业学院商学院山东轻工业学院

20、商学院4.3.2 Long-term Debt RatiooLong-term debt ratio is computed by dividing a firms long-term debt,usually defined as all non-current liabilities,by its total assets.山东轻工业学院商学院山东轻工业学院商学院4.3.2 Long-term Debt RatiooWhen computing the debt ratio and the long-term debt ratio,some managers and analysts us

21、e total capital in the denominator in place of total assets.山东轻工业学院商学院山东轻工业学院商学院4.3.2 Long-term Debt RatiooDebt-to-total capital ratio=Total liabilities non-current liabilities+equity山东轻工业学院商学院山东轻工业学院商学院4.3.2 Long-term Debt RatiooLong-term debt to total capital ratio=Long-term debt non-current liabi

22、lities+equity山东轻工业学院商学院山东轻工业学院商学院4.3.2 Long-term Debt RatiooLeverage ratios characterize a firm in terms of its relative amount of debt financing,but they do not indicate the firms ability to meet its debt obligations.oIn fact,the possibility exists that a firm with a higher debt ratio could actuall

23、y in a stronger position to service the firms debt due to stronger earnings and cash flows than a firm with a lower debt ratio and weaker earnings.山东轻工业学院商学院山东轻工业学院商学院4.3.3 Interest Coverage RatiooThe ratio measures the extent to which operating income can decline before the firm is unable to meet i

24、ts annual interest cost.山东轻工业学院商学院山东轻工业学院商学院4.3.3 Interest Coverage RatiooNote that earnings before interest and taxes,rather than net income,is used in the numerator because interest is paid with pre-tax dollars,and the firms ability to pay current interest is not affected by taxes.山东轻工业学院商学院山东轻工业学

25、院商学院4.3.4 Cash Flow Coverage Ratio山东轻工业学院商学院山东轻工业学院商学院4.4 Asset Management RatiosoThe accounts receivable turnover ratio is computed by dividing net credit sales by the average accounts receivable outstanding.山东轻工业学院商学院山东轻工业学院商学院Credit salesAccounts receivable XXX Sales XXXCash XXX Sales XXX山东轻工业学院商

26、学院山东轻工业学院商学院Net salesoNet sales=Sales-Sales returns and allowances-Sales discount山东轻工业学院商学院山东轻工业学院商学院Credit terms n/30 n/10 EOM 2/10，n/60 2/10，1/15，n/30山东轻工业学院商学院山东轻工业学院商学院Trade DiscountsList price/catalogue price-Trade discountActual price/invoice price山东轻工业学院商学院山东轻工业学院商学院Accounts receivable turnov

27、er ratio=oManagers should analyze the tradeoff between any increased sales from a more lenient credit policy and the associated costs of longer collection periods and more uncollected receivables to determine whether changing the firms credit sales policy could increase shareholders wealth.山东轻工业学院商学

28、院山东轻工业学院商学院Write off receivables-(1)Bad debt expense 1000 Allowance for doubtful accounts 1000山东轻工业学院商学院山东轻工业学院商学院Write off receivables-(2)oCurrent assets:Accounts receivable$10000 Less:Allowance for doubtful accounts (1000)$9000山东轻工业学院商学院山东轻工业学院商学院Write off receivables-(3)Allowance for doubtful acc

29、ounts Accounts receivable-XX举举 例例AgePercent uncollectible030 days2%3160 days4%6190 days10%Over 90 days30%o Collection period=365 accounts receivable Turnover ratioCollection period=365credit sales/average accounts receivable=Average accounts receivable Credit sales/365山东轻工业学院商学院山东轻工业学院商学院4.4.2 Inven

30、tory Turnover ratio山东轻工业学院商学院山东轻工业学院商学院举举 例例Accounts receivable 1000 Sales 1000Cost of goods sold 650 Merchandise inventory 650oA low,declining ratio may suggest the firm has continued to build up inventory in the face of weakening demand or may be carrying and reporting outdated or obsolete invento

31、ry that could only be sold at reduced prices,if at all.oOn the other hand,a manager or analyst should check to make sure that a high ratio does not reflect lost sales opportunities because of inadequate inventory levels caused by production problems,poor sales forecasting,or weak coordination betwee

32、n sales and production activities within the firm.oInventory processing period=365 inventory turnover ratioThe number of days sales in inventory 存货周转天数存货周转天数The number of days sales in inventory：存货周转天数存货周转天数o365/inventory turnovero365 Cost of goods sold Average inventoryoAverage inventory Cost of go

33、ods sold/365山东轻工业学院商学院山东轻工业学院商学院Accounts payable turnover ratio=4.4.3山东轻工业学院商学院山东轻工业学院商学院Accounts payable payment period=4.4.3oWhen a firm produces goods or acquires inventory for the sale and/or sells the items on a credit basis,it will need to have ample cash during the period between when the fir

34、m must pay for the raw materials,inventory and labor and when it receives cash from the sales of goods.山东轻工业学院商学院山东轻工业学院商学院Cash conversion cycle=4.4.3oThe length of the operating cycle is the time from the purchase of inventory to the collection of cash from the sale of that inventory;this interval

35、is equal to the number of days sales in inventory plus the average collection period.山东轻工业学院商学院山东轻工业学院商学院4.4.4 Asset Turnover Ratios山东轻工业学院商学院山东轻工业学院商学院4.5 Profitability Ratios山东轻工业学院商学院山东轻工业学院商学院4.5 Profitability Ratios山东轻工业学院商学院山东轻工业学院商学院4.5 Profitability Ratios山东轻工业学院商学院山东轻工业学院商学院4.5 Profitabilit

36、y RatiosoHigh net profit margins suggest a firm can control its costs or has a solid competitive position within its industry that is not threatened by cost-cutting competitors.oFirms in industries with high sales volumes(like retail grocery stores)can operate profitably with relatively low net prof

37、it margins because they experience a high turnover of their total assets,while firms in other industries require much higher margins to survive.山东轻工业学院商学院山东轻工业学院商学院4.5 Profitability Ratios山东轻工业学院商学院山东轻工业学院商学院ROAoROA ratios are also affected by the age of a firms plant and equipment,especially during

38、 periods of moderate to high inflation.山东轻工业学院商学院山东轻工业学院商学院4.5 Profitability Ratios山东轻工业学院商学院山东轻工业学院商学院4.5 Profitability Ratios山东轻工业学院商学院山东轻工业学院商学院4.6 Market Value Ratios Price/earnings RatioMarket-to-book Value Ratio 山东轻工业学院商学院山东轻工业学院商学院Earnings per shareEarnings per share=Earnings available to com

39、mon stockholdersNumber of common shares outstanding山东轻工业学院商学院山东轻工业学院商学院4.6 Market Value Ratios Dividend Yield Dividend Payout 山东轻工业学院商学院山东轻工业学院商学院4.7 Uses and LimitationsoWhile ratio analysis can provide useful information concerning a companys operations and financial condition,it does have limitat

40、ions that necessitate care and judgment.山东轻工业学院商学院山东轻工业学院商学院4.7 Uses and LimitationsoMany large firms operate different divisions in different industries,and for such companies it is difficult to develop a meaningful set of industry averages.山东轻工业学院商学院山东轻工业学院商学院4.7 Uses and LimitationsoMost firms wa

41、nt to be better than average,so merely attaining average performance is not necessarily good.山东轻工业学院商学院山东轻工业学院商学院4.7 Uses and LimitationsoThus,a ratio analysis for one firm over time,or a comparative analysis of firms of different ages,must be interpreted with judgment.山东轻工业学院商学院山东轻工业学院商学院4.7 Uses a

42、nd LimitationsoSeasonal factors can also distort a ratio analysis.山东轻工业学院商学院山东轻工业学院商学院4.7 Uses and LimitationsoDifferent accounting practices can distort comparisons.山东轻工业学院商学院山东轻工业学院商学院4.7 Uses and LimitationsoIt is difficult to generalize about whether a particular ratio is“good”or“bad”.山东轻工业学院商学院

43、山东轻工业学院商学院4.7 Uses and LimitationsoA firm may have some ratios that look“good”and others that look“bad”,making it difficult to tell whether the company is,on balance,strong or weak.山东轻工业学院商学院山东轻工业学院商学院4.7 Uses and LimitationsoEffective use of financial ratios requires that the financial statement upon which they are based be accurate.