Chapter 23 ("Financial Statement Analysis") Flashcards
THE COMPUTATION PHASE
The first step in financial statement analysis is the computation phase. Three basic types of calculations are used:
Vertical analysis is the relationship of each item on a financial statement to some base amount on the statement. On the income statement, each item is expressed as a percentage of net sales. On the balance sheet, each item is expressed as a percentage of total assets or total liabilities and stockholders’ equity.
Horizontal analysis is the percentage change for individual items in the financial statements from year to year.
Ratio analysis is the relationship between various items in the financial statements. Ratio analysis can involve items on the same statement or items on different statements.
Comparative statements
Comparative statements are financial statements presented side by side for two or more years.
common-size statements
Financial statements with items expressed as percentages of a base amount are called common-size statements
RATE OF RETURN ON SALES
Net income / Net Sales
答えは「ｘ％」の形式
% of each sales dollar that reflects net income.
RATE OF RETURN ON COMMON STOCKHOLDERS’ EQUITY
Income available to common stockholders / Common stockholders’ equity
答えは「x%」の形式
EARNINGS PER SHARE OF COMMON STOCK
Income available to common stockholders / Average number of shares of common stock outstanding during year
答えは「$x per share」の形式
PRICE-EARNINGS RATIO
Market price per share / Earnings per share
Price-earnings ratio compares the market value of common stock with the earnings per share of that stock.
答えは 「x to 1」 の形式
The price-earnings ratio is an indicator of the attractiveness of the stock as an investment at its present market value.
YIELD ON COMMON STOCK
Dividend per share / Market price per share
答えは「ｘ％」の形式
Cash income (dividend) from a share of common stock as a percentage of the market value of the share.
RATE OF RETURN ON TOTAL ASSETS
Income before interest expense and income taxes / Total assets
Effectiveness of management in utilizing assets, regardless of how they were financed.
ASSET TURNOVER
Net Sales / Total Assets
The higher the asset turnover, the more effectively the assets of the company are being used. The trend of this ratio is important because it indicates whether asset growth is accompanied by corresponding sales growth. If sales increase proportionately more than total assets, the ratio increases, which is a favorable indicator.
答えは「ｘ to 1」形式
NUMBER OF TIMES BOND INTEREST EARNED
Income before bond interest and income taxes / Bond interest cash requirement
答えは「X times」形式
Security afforded bondholders
RATIO OF STOCKHOLDERS’ EQUITY TO TOTAL EQUITIES
Stockholders’ equity / Total equities
答えは「X to 1」形式
Portion of assets provided by stockholders and therefore security afforded creditors.
RATIO OF STOCKHOLDERS’ EQUITY TO TOTAL LIABILITIES
Stockholders’ equity / Total liabilities
答えは「x to 1」形式
owners’ capital compared with liabilities; measures security afforded creditors.
Book value per share of common stock
Common stockholders’ equity / Number of common shares
答えは「$x」形式
Amount owner of each share would receive if assets were sold for their book value and the corporation was liquidated.
WORKING CAPITAL
Current asses - Current liabilities
Dollar amount of security provided short-term creditors
