FS Analysis Flashcards
It shows changes of corresponding FS items over a period of time
Horizontal Analysis
It is the process of comparing figures in the FS of a single period
Vertical Analysis
It measures an entity’s ability to meet short-term obligations and provides insights on present cash solvency
Liquidity Ratios
It measures an entity’s long-term financial viability. It is also called ‘leverage ratios’
Solvency Ratios
It measures an entity’s ability to use its assets and manage its liabilities effectively in the current period
Activity Ratios
These are used to determine how well an entity can generate profits from its operations
Profitability Ratios
These are used to help potential Investors make equity investment decisions using trends in earnings, dividends and stock prices
Market Value Ratios
Net Working Capital Formula
Current Assets less Current Liabilities
Current Ratio Formula
Current Assets / Current Liabilities
Quick Ratio Formula
Quick Assets / Current Liabilities
Note: Quick Assets exclude inventories
Debt Ratio Formula
Total Liabilities / Total Assets
Equity Ratio Formula
Total Equity / Total Assets
Debt-Equity Ratio Formula
Total Liabilities / Total Equity
Equity Multiplier Formula
1 / Equity Ratio
Note: May be computed also as
Assets / Equity
Times Interest Earned Formula
EBIT / Interest Payments
Inventory Turnover Formula
COGS / Ave. Inventory
Receivable Turnover Formula
Net Cr. Sales / Ave. Receivables
Payable Turnover Formula
Net Cr. Purchases / Ave. Payable
Asset Turnover Formula
Sales / Ave. Total Assets
Fixed Asset Turnover Formula
Sales / Ave. Fixed Assets
Age of Inventory Formula
360 days / Inventory Turnover
Age of Receivables Formula
360 days / Receivables Turnover
Age of Payable Formula
360 days / Payable Turnover
Normal Operating Cycle Formula
Age of Inventory + Age of Receivables
Cash Conversion Cycle
Normal Operating Cycle less Age of Payable
Gross Profit Margin Formula
Gross Profit / Sales
Operating Profit Margin Formula
EBIT / Sales
(Net) Profit Margin Formula
Profit / Sales
Return on Sales Formula
Income / Sales
Return on Assets Formula
Income / Ave. Assets
Return on Equity Formula
Income / Ave. Equity
Du Pont Model Formula
ROE=RoS x AT x Eqty Multiplier
EPS Formula
(Net Income - Preferred Dividends) / WAVE Common Sh. Outstanding
BVPS Formula
Common SHE / No. of Common Sh. Outstanding
Price-Earnings Ratio Formula
Market Price per Share / EPS
Dividends Yield Formula
Dividends per Share / Market Price per Share
Dividend Payout Formula
Dividend Per Share / EPS
Retention Ratio Formula
100% less Dividend Payout
Cash Ratio Formula
Cash + Marketable Securities / Current Liabilities
Cash Flow Margin Formula
Operating Cash Flow / Net Sales
Defensive Interval Formula
Quick Assets / Ave. CapEx
Times Preferred Dividends Earned Formula
NI after Tax / Preferred Dividends
Capital Intensity Ratio Formula
Total Assets / Net Sales
