MBU 652
Financial Decision
Making
Performance Measurements
Profitability, Liquidity, Activity, & Debt
(with answers to cal...
Categories of a Financial
Statement Analysis
 Profitability
 Liquidity
 Activity
 Debt (Leverage)
Profitability
 Return on Assets (ROA)
 Return on Equity (ROE)
 Price/Earnings Ratio(P/E Ratio)
 Dividend Yield
 Divid...
Return on Assets (ROA)
ROA = ____Net Income___
Average Total Assets
ROA = ____107.2___
1591.7 + 1599.3 / 2 =
Return on Equity (ROE)
ROE = ___Net Income___
Average Owners’ Equity
ROE = ___107.2___
908.7 + 983.8 / 2 =
Price/Earnings Ratio
(P/E Ratio)
P/E Ratio = Market Price of Common Stock
Earnings Per Share
P/E Ratio = 90.00_(Market Pri...
Dividend Yield
Dividend Yield = Annual Dividend per share
Market Price Per Share
Dividend Yield = _____.50_____
90.00
Dividend Pay-Out Ratio
Dividend = Annual Dividend Per Share
Pay-Out Ratio Earnings Per Share
Dividend = _____.50_____
Pay-...
Liquidity
 Working Capital
 Current Ratio
 Acid-Test Ratio
Working Capital
Current Assets
- Current Liabilities
Working Capital
672.4
- 205.1
467.3
Current Ratio
Current Ratio = __Current Assets__
Current Liabilities
Current Ratio = __672.4 __
205.1
Acid-Test Ratio
Acid-Test = Cash + Accounts Receivable
Ratio Current Liabilities
Acid-Test = _14.3 + 218.6_
Ratio 205.1
Activity
 Accounts Receivable Turnover
 Inventory Turnover
Accounts Receivable
Turnover (A/R)
A/R Turnover = ____Sales_____
Average A/R
A/R Turnover = ____1328.2____
200.2 + 218.6 /...
Inventory Turnover
Inventory = Cost of Goods Sold (COGS)
Turnover Average Inventory
Inventory = _____876.4______
Turnover ...
Debt (Leverage)
 Debt Ratio
 Debt/Equity Ratio
Debt Ratio
Debt = ______Total Liabilities_______
Ratio Total Liabilities & Owners’ Equity
Debt = ______615.5_______
Ratio ...
Debt/Equity Ratio
Debt/Equity = __Total Liabilities__
Ratio Total Owners’ Equity
Debt/Equity = __615.5__
Ratio 983.8
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MBU652 Financial Statement Analysis with answers

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MBU652 Financial Statement Analysis with answers

  1. 1. MBU 652 Financial Decision Making Performance Measurements Profitability, Liquidity, Activity, & Debt (with answers to calculations for analyzing the financial statements from textbook)
  2. 2. Categories of a Financial Statement Analysis  Profitability  Liquidity  Activity  Debt (Leverage)
  3. 3. Profitability  Return on Assets (ROA)  Return on Equity (ROE)  Price/Earnings Ratio(P/E Ratio)  Dividend Yield  Dividend Pay-Out Ratio
  4. 4. Return on Assets (ROA) ROA = ____Net Income___ Average Total Assets ROA = ____107.2___ 1591.7 + 1599.3 / 2 =
  5. 5. Return on Equity (ROE) ROE = ___Net Income___ Average Owners’ Equity ROE = ___107.2___ 908.7 + 983.8 / 2 =
  6. 6. Price/Earnings Ratio (P/E Ratio) P/E Ratio = Market Price of Common Stock Earnings Per Share P/E Ratio = 90.00_(Market Price) 2.50 (EPS)
  7. 7. Dividend Yield Dividend Yield = Annual Dividend per share Market Price Per Share Dividend Yield = _____.50_____ 90.00
  8. 8. Dividend Pay-Out Ratio Dividend = Annual Dividend Per Share Pay-Out Ratio Earnings Per Share Dividend = _____.50_____ Pay-Out Ratio 2.50
  9. 9. Liquidity  Working Capital  Current Ratio  Acid-Test Ratio
  10. 10. Working Capital Current Assets - Current Liabilities Working Capital 672.4 - 205.1 467.3
  11. 11. Current Ratio Current Ratio = __Current Assets__ Current Liabilities Current Ratio = __672.4 __ 205.1
  12. 12. Acid-Test Ratio Acid-Test = Cash + Accounts Receivable Ratio Current Liabilities Acid-Test = _14.3 + 218.6_ Ratio 205.1
  13. 13. Activity  Accounts Receivable Turnover  Inventory Turnover
  14. 14. Accounts Receivable Turnover (A/R) A/R Turnover = ____Sales_____ Average A/R A/R Turnover = ____1328.2____ 200.2 + 218.6 / 2
  15. 15. Inventory Turnover Inventory = Cost of Goods Sold (COGS) Turnover Average Inventory Inventory = _____876.4______ Turnover 390.0 + 392.2 / 2
  16. 16. Debt (Leverage)  Debt Ratio  Debt/Equity Ratio
  17. 17. Debt Ratio Debt = ______Total Liabilities_______ Ratio Total Liabilities & Owners’ Equity Debt = ______615.5_______ Ratio 1599.3
  18. 18. Debt/Equity Ratio Debt/Equity = __Total Liabilities__ Ratio Total Owners’ Equity Debt/Equity = __615.5__ Ratio 983.8
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