The document discusses financial analysis and key financial statements. Financial analysis involves evaluating businesses and projects to assess their suitability for investment. It entails examining a company's income statement, balance sheet, and cash flow statement to analyze past and future performance. The balance sheet lists assets, liabilities, and equity. The income statement shows revenues, expenses, and profits. The cash flow statement breaks cash flows into operating, investing, and financing activities. Financial ratios are used to analyze the information in financial statements and measure profitability, asset utilization, and liquidity.

1. PREPARED BY:
DIVYANSHI DAYALANI

2.  The process of evaluating businesses,
projects, budgets and other finance-related
entities to determine their suitability for
investment.
 When looking at a specific company, the
financial analyst will often focus on the
income statement, balance sheet, and cash
flow statement.
 In addition, one key area of financial
analysis involves extrapolating the company's
past performance into an estimate of the
company's future performance.

3.  Balance Sheet
 Income Statement
 Statement of Cash Flows
 Statement of Stockholders’ Equity

4.  Assets: probable future economic
benefits Current Assets (cash & cash
equivalents, short-term marketable
securities), accounts receivable,
inventory, other)
 Property, plant & equipment
 Long-term investments
 Other assets

5.  Liabilities : Current Liabilities (accounts
payable, accrued & other current
liabilities),Long-term debt , Commitments &
contingencies , Other liabilities.
 Stockholders equity : Preferred stock,
Common stock ,Other paid-in capital
,Retained earnings ,Treasury stock , Other
comprehensive income ,Other equity items

6.  Revenues: inflows from major operations
 Expenses: outflows from major operations
 Gains & Losses: changes in equity from
peripheral activities
 Net income: bottom line all operating
activities recorded on the income statement
 Comprehensive income: Changes in equity
from all non-owner sources

7.  Cash Flows from Operations
 Cash Flows from Investing Activities
 Cash Flows from Financial Activities
 Statement of Stockholders’ Equity

8.  A ratio is an arithmetic relationship between
two figures.
 Financial ratio analysis is a study of ratios
between various items or group of items in
financial statements.

9.  Profitability Ratio
 Activity Ratio/Turnover Ratio
 Liquidity Ratio

10.  Profitability ratio :Profitability measures
look at how much profit the firm generates
from sales or from its capital assets.
 Gross profit % = gross profit/Net sales *100
 Net profit % = Net profit after tax/Net
sales*100
 Return on assets = Net profit/average total
assets*100

11.  Assets turnover = Net sales/Average total
assets
 Inventory turnover = COGS/Average Ending
inventory
 Average collection period =Average accounts
receivable / Average daily net credit sales

12.  Working capital = current assets-current
liabilities
 Current ratio= current assets/current
liabilities
 Quick ratio = CA-(stock + prepaid exp.)
current liabilities

13.  Earning per share = Net profit after tax
No. Of equity share
 Price earning ratio = Market price per share
Earning per share
 Dividend per share = Dividend
No.of Equity share