PowerPoint 3

Question 1

what’s the Horizontal analysis ?

Answer 1

Shows the time evolution of the items in the financial statements

Question 2

what’s the Vertical analysis ?

Answer 2

Shows the structure of the Assets and the Financing (in Balance sheet) and
the major sources of Revenues and of Costs (in Income statement)

Question 3

How to analyse liquidity in just units?

Answer 3

Working capital = Current assets – Current liabilities (>0); essentially,
(Inventories+Customers+Cash) – Suppliers

Question 4

Which are the liquidity ratios ?

Answer 4

Current ratio
Quick ratio

Question 5

Which are the liquidity activity ratios ?

Answer 5

• Days Inventory
• Days Receivables
• Days Payables

Question 6

What is the liquidity cycle formula ?

Answer 6

Liquidity cycle = Days receivables + Days Inventory – Days payable

Question 7

Which are the ratios to use in profitability analysis ?

Answer 7

• ROA (Return on Assets)
• ROE (Return on Equity)
• ROS (Return on Sales)

Question 8

When do we have Financial leverage ?

Answer 8

(Assets/Equity) >1

Question 9

What do we use to analyse the operating leverage ?

Answer 9

Gross Margin / Operating Income

Question 10

In the break even what is the contribution margin ?

Answer 10

Price*Quantity – Variable Costs

Question 11

In the break even what is the unit contribution margin ?

Answer 11

PriceUnit - UnitVariableCosts

Question 12

what is the Break-even Revenue?

Answer 12

Product * Quantity

Question 13

what is the Safety Margin ?

Answer 13

the Safety Margin, defined as (PQ-PQ)/P*Q or (Q-Q)/Q