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St.mgt

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    St.mgt St.mgt Document Transcript

    • FINANCIAL ANALYSISThe financial statement of any organization shows the results of its operation and its position inbusiness. It is a process which involves reclassification and summarization of informationthrough the establishment of ratios and trends. The overall objective of financial statementanalysis is the examination of a firm’s financial position.Vertical AnalysisIn vertical analysis of balance sheet the percentage of each item of statement is calculated to totaland then the change in the percentages is checked with in years. In vertical analysis of profit andloss account /income statement percentage of each item of statement is calculated by dividing iton net sales.Horizontal AnalysisThrough this analysis we can check that what changes are occurred in the items of balance sheetand profit and loss account. Last year become base for next year. And change can be easilyanalyzed. Vertical Analysis of Balance SheetPARTICULARS 2007 Percentage 2006 PercentageAssetsCurrent assetsCash and cash 2074000 24.3% 2090000 23.69%equivalents Short term 570000 6.67% 952000 10.79%investmentNet receivables 156000 1.83% _ _Inventory 1796000 21.0% 1696000 19.2%Other current 433000 5.07% 501000 5.68%assetsTotal current 5029000 58.86% 5239000 59.4%assets
    • Long term _ _ _ _investmentsProperty ,plant 3197000 37.4% 3246000 36.8%and equipmentGoodwill _ _ _ _Intangible assets _ _ _ _Accumulated _ _ _ _amortizationOther assets 131000 1.5% 336000 3.8%Deferred long 187000 2.19% _ _term assetschargesTotal assets 8544000 8821000LiabilitiesCurrent liabilitiesAccounts payable 1947000 22.79% 1942000 22.01%Short/current long 325000 3.8% _ _term debtOther current _ _ _ _liabilitiesTotal current 2272000 26.6% 1942000 22.01%liabilitiesLong term debt 188000 2.2% 513000 5.8%Other liabilities 910000 10.65% 941000 10.67%Deferred long _ _ _ _term liabilitychargesMinority interest _ _ _ _Negative _ _ _ _goodwill
    • Total liabilities 3370000 39.4% 3396000 38.5%Stockholder’sequityMisc stocks, _ _ _ _options, warrantsRedeemable _ _ _ _preferred stockPreferred stock _ _ _ _Common stock 55000 .64% 54000 .61%Retained earnings 8646000 101.2% 8133000 92.2%Treasury stock (6235000) (72.97) (5210000) (59.1%)Capital surplus 2631000 30.79% 2402000 27.2%Other SE 77000 0.90% 46000 0.52%Total SE 5174000 60.56% 5425000 61.5%Total liabilities 8544000 8821000and SE Vertical Analysis of Profit And Loss AccountPARTICULARS 2007 Percentage 2006 PercentageNet sales 15943000 100% 16023000 100%CGS and 10294000 64.57% 10154000 63.4%occupancy
    • expenseGross profit 5649000 35.43% 5869000 36.6%Operating 4475000 28.1% 4124000 25.74%expensesLoss on early _ _ _ _retirement of debtInterest expense 41000 0.26% 45000 0.28%Interest income 131000 0.82% 93000 0.58%Earning before 1264000 7.93% 1793000 11.2%income taxesCurrent income 450000 2.82% 657000 4.1%taxes federalCurrent income 64000 0.40% 63000 0.39%taxes stateCurrent income 50000 0.31% 45000 0.28%taxes foreignTotal current 564000 3.54% 765000 4.7%income taxesDeferred income (77000) (0.48%) (44000) (0.27%)taxes (benefit)federalDeferred income (8000) (.05%) 4000 .025taxes (benefit)stateDeferred income 7000 .04% (45000) (0.28%)taxes (benefit)foreignTotal deferred (78000) (0.49%) (85000) (0.53%)income taxesIncome taxes 486000 3.05% 680000 4.24%Net earnings 778000 4.89% 1113000 6.95%(loss)
    • RATIO ANALYSISRatio analysis includes method of interpreting financial ratios to access the performance of anyorganization. The basic input to ratio analysis is profit and loss account and balance sheet. Ratioanalysis of any organization is in interest of its creditors, employees, shareholders and of itsmanagement as well. Both existing and prospective customer are interested in the ratio analysisof organizationRatio analysis is a valuable aid to management in the discharge of its basic functions such asplanning, forecasting, control etc. these ratios describe the relationship with the functioning ofthe business and helpful for controlling cost of goods manufactured. The great advantage of ratioanalysis is that it reduces raw data of widely varying magnitude to a common comparative basis.Thus, ratio analysis is the most meaningful to compare financial information regarding a givingcompany.Liquidity RatiosCurrent RatioFormula: Current ratio= Current assets Current liabilities Year 2006 Year 2007 Current assets 5029000 Current liabilities 2272000 Current ratio 2.21 times
    • InterpretationQuick RatioFormula: Current ratio= Current assets-inventory Current liabilities Year 2006 Year 2007 current assets-inventory 3233000 Current liabilities 2272000 Current ratio 1.4 timesInterpretationSolvency ratiosDebt RatioFormula:Debt Ratio=Total liabilities Total assets
    • Year 2006 Year 2007 3370000 Total liabilities Total assets 8544000 Debt ratio 0.39 timesInterpretationLong term Debt RatioFormula:Debt Ratio=Total liabilities Total assets Year 2006 Year 2007 188000 LTD LTD+TE 5362000 Debt ratio 0.035 times
    • InterpretationTime interest earned ratioFormula Time interest earned ratio=Earning before interest and taxes Interest Year 2006 Year 2007 1174000 Earning before interest and taxes Interest 41000 Time interest earned 28.63 times ratioInterpretation
    • Asset management/turnover ratiosTotal asset turnoverFormula: Total asset turnover= Sales Total Assets Year 2006 Year 2007 15943000 Sales Total assets 8544000 1.86 times Total asset turnoverInterpretationInventory turnoverFormula: Total asset turnover= CGS Inventory
    • Year 2006 Year 2007 10294000 CGS Inventory 1796000 5.73 times Inventory turnoverInterpretationProfit ratiosPROFIT MARGINFormula:Profit margin= Net Income sales Year 2006 Year 2007 Net Income 778000 Sales 15943000 Profit margin 4.88%Interpretation
    • Return on assetsFormula:Return on assets= Net Income Total assets Year 2006 Year 2007 Net Income 778000 Total assets 8544000 ROA 9.1%InterpretationReturn on equityFormulaReturn on common equity= Net Income Total Equity Year 2006 Year 2007 Net Income 778000 TOTAL Equity 5174000 ROE 15.04%
    • InterpretationEarning per shareFormulaEarning per share= Earning available for common stock holder No. of shares of common stock outstanding Year 2006 Year 2007 Earning available for 778000 common stock holder No. of shares of common 813870 stock outstanding EPS 0.95$InterpretationProjected income statement of 2008
    • PARTICULARS 2008Net sales 15863285CGS and occupancy expense 10073185Gross profit 5790100Operating expenses 4855874Loss on early retirement of debt _Interest expense 37355Interest income 184527Earning before income taxes 891120Current income taxes federal 308250Current income taxes state 64102Current income taxes foreign 55555Total current income taxes 415668Deferred income taxes (benefit) 19250federalDeferred income taxes (benefit) state -Deferred income taxes (benefit) 1092foreignTotal deferred income taxes (71604)Income taxes 374790Net earnings (loss) 1350607
    • Projected balance sheet of 2008 PARTICULARS 2008AssetsCurrent assetsCash and cash equivalents 2058122Short term investment 341282Net receivables 159000Inventory 1901896Other current assets 374229Total current assets 4834529Long term investments _Property ,plant and equipment 3148739Goodwill _Intangible assets _Accumulated amortization _Other assets 51074Deferred long term assets charges 189500Total assets 8223842
    • LiabilitiesCurrent liabilitiesAccounts payable 1995675Short/current long term debt 327000Other current liabilities _Total current liabilities 2658076Long term debt 68897Other liabilities 880021Deferred long term liability charges _Minority interest _Negative goodwill _Total liabilities 14342984Stockholder’s equityMisc stocks, options, warrants _Redeemable preferred stock _Preferred stock _Common stock 560186Retained earnings 9191358Treasury stock (5008345)Capital surplus 2471731Other SE 128891
    • Total SE 7753922Total liabilities and SE 8223842