The document discusses various methods for analyzing the financial performance of a company through its financial statements, including ratio analysis, common size analysis, trend analysis, DuPont analysis, and other types of analyses. It provides examples of different types of ratios that can be used, such as liquidity ratios, activity ratios, leverage ratios, and profitability ratios. It also discusses how to interpret ratios and cautions that ratios must be compared to benchmarks and should account for differences in accounting methods.
It is an analysis of strength and weakness of an organisation by establishing the quantitative relation among the items of Balance Sheet or Income Statement of such an organisation
It is an analysis of strength and weakness of an organisation by establishing the quantitative relation among the items of Balance Sheet or Income Statement of such an organisation
Profitability Ratio
A profitability ratio is a measure of financial ratio defining the profit percent and return percent from the business using data from financial statements at a specific point of time
It assess business’s ability to generate gross profit, operating profit and net profit from the sales using data from profit& loss statement
It even takes into consideration various return generating ability of business in terms of return on assets, return on capital employed, return on equity, return on investment using data from balance sheet
Types of profitability ratio
Gross Profit Ratio, Net Profit Ratio, Operating Profit Ratio, Return on Assets, Return on Equity, Return on Investment, Return on Capital Employed
Gross Profit Ratio
Gross Profit Ratio(GPR) is a profitability ratio that shows the relationship between gross profit and the revenue from net sales
GPR = (퐆퐫퐨퐬퐬 퐏퐫퐨퐟퐢퐭)/(퐍퐞퐭 퐒퐚퐥퐞퐬)
Net Profit Ratio
The net profit ratio is equal to how much net profit is generated as a ratio of revenue earned through sales
Net Profit Ratio = (퐍퐞퐭 푷풓풐풇풊풕)/(퐍퐞퐭 푺풂풍풆풔)
Operating Profit Margin is a profitability ratio used to calculate the percentage of operating profit a company produces from its operations, prior to deduction of taxes and interest charges
Operating Profit Ratio
Operating Profit Ratio = (퐎퐩퐞퐫퐚퐭퐢퐧퐠 퐏퐫퐨퐟퐢퐭)/(퐍퐞퐭 퐒퐚퐥퐞퐬)
Return on assets (ROA) is a kind of profitability measure used to determine returns on assets relevant when compared across the companies or previous performance of the company
Return On Asset = (퐍퐞퐭 퐏퐫퐨퐟퐢퐭)/(퐀퐯퐠.퐓퐨퐭퐚퐥 퐀퐬퐬퐞퐭퐬)
Return on equity (ROE) is a measure of financial performance calculated by dividing net profit by average shareholders' equity
ROE = (퐍퐞퐭 퐏퐫퐨퐟퐢퐭)/(퐀퐯퐠.퐓퐨퐭퐚퐥 퐄퐪퐮퐢퐭퐲)
Return on capital employed is a profitability ratio used in valuation of company’s financial position depicting the return out of capital employed
ROCE = 퐄퐁퐈퐓/(퐂퐚퐩퐢퐭퐚퐥 퐄퐦퐩퐥퐨퐲퐞퐝)
Return on investment is a profitability measure used by businesses to identify the efficiency of business in generating return out of an investment
ROI = (퐍퐞퐭 퐏퐫퐨퐟퐢퐭)/(퐂퐨퐬퐭 퐨퐟 퐈퐧퐯퐞퐬퐭퐦퐞퐧퐭)
Ratio analysis refers to the analysis and interpretation of the data collected from the financial statements (i.e., Profit and Loss Statement, Balance Sheet and Fund/Cash Flow statement etc.)
Thank You for Watching
DevTech Finance
This presentation will help professionals as well as students to understand ratios. I have used very easy language and have tried to be more descriptive.
for full text article go to : www.accountingchimp.com/ratio-analysis/
In this article of Ratio Analysis, you will learn how they can be used to analyze a company. Understand the meaning and formulas associated with Liquidity ratios, Profitability ratios, Turnover ratios, and Debt ratios
Investment Valuation Ratios are used by investors to estimate the attractiveness of a potential or existing investment and get an idea of its valuation. Investment valuation ratios compare relevant data that help users gain an estimate of valuation.
Investment Valuation Ratios: Per Share Ratios, Dividend Per Share (DPS), Earnings Per Share (EPS), Dividend Payout Ratio (DPR),
Dividend Yield Ratio, Price / Earnings ratio (PER), Price to Cash Flow, Price to Book Value, Price to Earnings Growth (PEG), Enterprise Value (EV) multiple
Profitability Ratio
A profitability ratio is a measure of financial ratio defining the profit percent and return percent from the business using data from financial statements at a specific point of time
It assess business’s ability to generate gross profit, operating profit and net profit from the sales using data from profit& loss statement
It even takes into consideration various return generating ability of business in terms of return on assets, return on capital employed, return on equity, return on investment using data from balance sheet
Types of profitability ratio
Gross Profit Ratio, Net Profit Ratio, Operating Profit Ratio, Return on Assets, Return on Equity, Return on Investment, Return on Capital Employed
Gross Profit Ratio
Gross Profit Ratio(GPR) is a profitability ratio that shows the relationship between gross profit and the revenue from net sales
GPR = (퐆퐫퐨퐬퐬 퐏퐫퐨퐟퐢퐭)/(퐍퐞퐭 퐒퐚퐥퐞퐬)
Net Profit Ratio
The net profit ratio is equal to how much net profit is generated as a ratio of revenue earned through sales
Net Profit Ratio = (퐍퐞퐭 푷풓풐풇풊풕)/(퐍퐞퐭 푺풂풍풆풔)
Operating Profit Margin is a profitability ratio used to calculate the percentage of operating profit a company produces from its operations, prior to deduction of taxes and interest charges
Operating Profit Ratio
Operating Profit Ratio = (퐎퐩퐞퐫퐚퐭퐢퐧퐠 퐏퐫퐨퐟퐢퐭)/(퐍퐞퐭 퐒퐚퐥퐞퐬)
Return on assets (ROA) is a kind of profitability measure used to determine returns on assets relevant when compared across the companies or previous performance of the company
Return On Asset = (퐍퐞퐭 퐏퐫퐨퐟퐢퐭)/(퐀퐯퐠.퐓퐨퐭퐚퐥 퐀퐬퐬퐞퐭퐬)
Return on equity (ROE) is a measure of financial performance calculated by dividing net profit by average shareholders' equity
ROE = (퐍퐞퐭 퐏퐫퐨퐟퐢퐭)/(퐀퐯퐠.퐓퐨퐭퐚퐥 퐄퐪퐮퐢퐭퐲)
Return on capital employed is a profitability ratio used in valuation of company’s financial position depicting the return out of capital employed
ROCE = 퐄퐁퐈퐓/(퐂퐚퐩퐢퐭퐚퐥 퐄퐦퐩퐥퐨퐲퐞퐝)
Return on investment is a profitability measure used by businesses to identify the efficiency of business in generating return out of an investment
ROI = (퐍퐞퐭 퐏퐫퐨퐟퐢퐭)/(퐂퐨퐬퐭 퐨퐟 퐈퐧퐯퐞퐬퐭퐦퐞퐧퐭)
Ratio analysis refers to the analysis and interpretation of the data collected from the financial statements (i.e., Profit and Loss Statement, Balance Sheet and Fund/Cash Flow statement etc.)
Thank You for Watching
DevTech Finance
This presentation will help professionals as well as students to understand ratios. I have used very easy language and have tried to be more descriptive.
for full text article go to : www.accountingchimp.com/ratio-analysis/
In this article of Ratio Analysis, you will learn how they can be used to analyze a company. Understand the meaning and formulas associated with Liquidity ratios, Profitability ratios, Turnover ratios, and Debt ratios
Investment Valuation Ratios are used by investors to estimate the attractiveness of a potential or existing investment and get an idea of its valuation. Investment valuation ratios compare relevant data that help users gain an estimate of valuation.
Investment Valuation Ratios: Per Share Ratios, Dividend Per Share (DPS), Earnings Per Share (EPS), Dividend Payout Ratio (DPR),
Dividend Yield Ratio, Price / Earnings ratio (PER), Price to Cash Flow, Price to Book Value, Price to Earnings Growth (PEG), Enterprise Value (EV) multiple
Financial ratios and their use in understanding Financial StatementsPranav Dedhia
An introduction and in-depth understanding on the importance of Financial ratios in understanding financial statements of business entities along with relevant examples
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
how can I sell my pi coins for cash in a pi APPDOT TECH
You can't sell your pi coins in the pi network app. because it is not listed yet on any exchange.
The only way you can sell is by trading your pi coins with an investor (a person looking forward to hold massive amounts of pi coins before mainnet launch) .
You don't need to meet the investor directly all the trades are done with a pi vendor/merchant (a person that buys the pi coins from miners and resell it to investors)
I Will leave The telegram contact of my personal pi vendor, if you are finding a legitimate one.
@Pi_vendor_247
#pi network
#pi coins
#money
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
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how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
Latino Buying Power - May 2024 Presentation for Latino CaucusDanay Escanaverino
Unlock the potential of Latino Buying Power with this in-depth SlideShare presentation. Explore how the Latino consumer market is transforming the American economy, driven by their significant buying power, entrepreneurial contributions, and growing influence across various sectors.
**Key Sections Covered:**
1. **Economic Impact:** Understand the profound economic impact of Latino consumers on the U.S. economy. Discover how their increasing purchasing power is fueling growth in key industries and contributing to national economic prosperity.
2. **Buying Power:** Dive into detailed analyses of Latino buying power, including its growth trends, key drivers, and projections for the future. Learn how this influential group’s spending habits are shaping market dynamics and creating opportunities for businesses.
3. **Entrepreneurial Contributions:** Explore the entrepreneurial spirit within the Latino community. Examine how Latino-owned businesses are thriving and contributing to job creation, innovation, and economic diversification.
4. **Workforce Statistics:** Gain insights into the role of Latino workers in the American labor market. Review statistics on employment rates, occupational distribution, and the economic contributions of Latino professionals across various industries.
5. **Media Consumption:** Understand the media consumption habits of Latino audiences. Discover their preferences for digital platforms, television, radio, and social media. Learn how these consumption patterns are influencing advertising strategies and media content.
6. **Education:** Examine the educational achievements and challenges within the Latino community. Review statistics on enrollment, graduation rates, and fields of study. Understand the implications of education on economic mobility and workforce readiness.
7. **Home Ownership:** Explore trends in Latino home ownership. Understand the factors driving home buying decisions, the challenges faced by Latino homeowners, and the impact of home ownership on community stability and economic growth.
This SlideShare provides valuable insights for marketers, business owners, policymakers, and anyone interested in the economic influence of the Latino community. By understanding the various facets of Latino buying power, you can effectively engage with this dynamic and growing market segment.
Equip yourself with the knowledge to leverage Latino buying power, tap into their entrepreneurial spirit, and connect with their unique cultural and consumer preferences. Drive your business success by embracing the economic potential of Latino consumers.
**Keywords:** Latino buying power, economic impact, entrepreneurial contributions, workforce statistics, media consumption, education, home ownership, Latino market, Hispanic buying power, Latino purchasing power.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
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2. How to measure the financial performance of a company
through financial statements???
1. Ratio Analysis
2. Common size Analysis
3. Trend Analysis-give an picture how financial statements
items are changes over time.
4. DuPont Analysis
1. Growth Analysis
2. Profitability Analysis
3. Sustainability of Earnings Analysis
3. • Ratios are intended to provide meaningful relationship among
the individual values in the financial statements.
• Financial ratios, calculated from the information of financial
statements, are used to analyze a firm’s past financial
performance.
• Financial ratios are used to compare the risk and return of
different firms in order to help investors and creditors make
intelligent investment and credit decisions.
• Ratios are meaningful, if we compare with- the aggregrate
economy, the industry or industry avegare, its major
competitiors/ peers (cross-sectional analysis) and its past
performance (Time-series analysis).
Analyzing Financial Performance through Ratio
4. Such decisions range from an evaluation of changes in performance over time for
a particular investment to a comparison among all firms within a single industry
or peer firm (Matched firm) at a specific point in time.
Purpose and Use of Ratio Analysis
• Ratios can be used to compare the risk and return relationships
of different firms of different sizes.
• Ratios can provide a profile of a firm, its economic
characteristics and competitive strategies, and its unique
operating, financial and investment characteristics.
• Given the differences between industries and of the effect of
varying capital structures, and differences in accounting &
reporting methods, changes (trends) in a ratio and variability
over time may be more informative than the level at any point
in time.
Analyzing Financial Performance through Ratio
5. Five broad ratio categories:
Liquidity Analysis — Measures the adequacy of a firm’s cash resources
to meet its near-term cash obligations.
Efficiency or Activity Analysis — Evaluate revenues and output
generated by the firm’s assets.
Leverage or Solvency Analysis — Examines the firm’s capital structure
in terms of the mix of its debt financing sources and the ability of the
firm to satisfy its longer-term debt and investment obligations.
Profitability Analysis — Measures the income of the firm relative to its
revenues and invested capital.
Market Ratio — Relate a firm’s market value, as measured by it’s
current market share price to certain accounting values.
Analyzing Financial Performance through Ratio
6. Liquidity Ratio
to judge a firm’s ability to meet short-term (recurring) financial obligations.
• Current Ratio
• Quick Ratio or Acid Test Ratio
• Cash Ratio
7. Efficiency or Activity Ratio
to measure how efficiently the firm uses its resources (assets) to generate sales.
• Accounts Receivables Turnover
• Average Collection Period
• Inventory Turnover
• Inventory Processing Period
8. Efficiency or Activity Ratio
to measure how efficiently the firm uses its resources (assets) to generate sales.
• Accounts Payable Turnover
• Payables Payment Period
Operating Cycle= Avg. Collection Period+ Inventory Processing Period
Cash Conversion Period: Operating Cycle- Payables Payment Period
9. Efficiency or Activity Ratio
to measure how efficiently the firm uses its resources (assets) to generate sales.
• Total Asset Turnover
• Current Asset Turnover
• Fixed Asset Turnover
• Equity Turnover
10. Solvency or Leverage Ratio
to judge a firm’s ability to meet long-term debt obligations.
• Debt Ratio
• Debt-equity Ratio
• Time Interest Earned or Interest Coverage Ratio
• Fixed Cost Coverage Ratio
ExpensesInterest
(EBIT)TaxesandInterestBeforeEarning
TIE
PaymentLeaseExpensesInterest
PaymentLease(EBIT)TaxesandInterestBeforeEarning
FCCR
11. Profitability Ratio
to judge the degree to which a firm is profitable in relation to some variable.
• Gross Profit Margin
• Operating Profit Margin
• Net Profit Margin
Sales
EBIT
or
Sales
ProfitOperating
MarginProfitOperating
Sales
ProfitGross
MarginProfitGross
Sales
ProfitNet
MarginProfitNet
12. • Return on Assets:
• Return on Equity
AssetsTotal
IncomeNet
AssetsonReturn
AssetsTotal
EBIT
AssetsonReturnGross
EquityCommon
IncomeNet
EquityonReturn
Profitability Ratio
to judge the degree to which a firm is profitable in relation to some variable.
13. Market Ratio
Relate a firm’s market value, as measured by it’s current market share price to certain accounting values.
• Price to Earnings Ratio
• Price to Sales Ratio
• Price to Cash Flows Ratio
• Price to Book Value Ratio
14. Ratio Analysis: Cautionary Notes
Ratio computations and comparisons are confounded by the lack or
inappropriate use of benchmarks, the timing of transactions, negative
numbers, and differences in reporting methods.
Bechmarks
I. Ratio analysis often lacks appropriate benchmarks to indicate optimum
levels.
II. Using an industry average as the benchmark may be useful for
comparisons within industry, but not for comparisons between companies
in different industries.
III. Even for intraindustry analysis, the benchmark may have limited
usefulness if the whole industry or major firms in that industry are doing
poorly.
15. Return on Equity = Net Income / Equity
Company Income Equity ROE
A Tk 10,000 Tk 100,000 10%
B (10,000) (100,000) 10%
Negative Numbers
Accounting Methods
Ratios are not comparable between firms with differing
accounting methods or for the same firm over time when it changes
accounting methods.
16. 1. For annual reports, the fiscal year-end may correspond to the low
point of a firm’s operating cycle, when reported levels of assets and
libilities may not reflect the levels typical of normal operations. As a
result, especially in the case of seasonal businesses, ratios may not
reflect normal operating relationships.
2. Transaction at year-end lead to manipulation of the ratios to show
the firm in more favorable light, often called window dressing.
Accounting Methods
17. DuPont Analysis
DuPont analysis is an extended analysis of a company's return on
equity. It concludes that a company can earn a high return on equity if:
1. It earns a high net profit margin;
2. It uses its assets effectively to generate more sales; and/or
3. It has a high financial leverage
It also shows the basic strength and weakness of the company and
which factor(s) influence ROE severely.
1. Growth Analysis
2. Profitability Analysis
3. Sustainability of Earnings Analysis
18. ROE Decomposition
3 Factors ROE Decomposition :
NPM
Ability to cut
cost and
maximize profit
Ability to utilize
TA to generate
sales
Ability of utilize
financial
leverage or debt
TAT EM
19. ROE = EBIT Margin × Interest Burden × Tax Burden × Asset Turnover
× Financial Leverage
ROE Decomposition
5 Factors ROE Decomposition :
DuPont equation provides a broader picture of the return the company is
earning on its equity. It tells where a company's strength lies and where
there is a room for improvement.
DuPont equation could be further extended by breaking up net profit
margin into EBIT margin, tax burden and interest burden. This five-factor
analysis provides an even deeper insight.
20. A common-size financial statement is simply one that is created to display line items on
a statement as a percentage of one selected or common figure. Creating common-size
financial statements makes it easier to analyze a company over time and compare it
with peers. Using common-size financial statements helps investors spot trends that a
raw financial statement may not uncover.
All three of the primary financial statements can be put into a Common-size format.
Common-Size Analysis Of Financial Statements
Advantages of Common Size statement:
1. It reveals Sources and Application of Funds in a nutshell which help in
taking decision.
2. If common size statements of 2 or more years are compared it indicate
the changing proportion of various components of Assets, Liabilities,
Cost, Net Sale & Profit.
3. When Inter Firm Comparison is made with the help of Common size
statement it helps in doing corporate evaluation and Ranking.
21. Linde Bangladesh Ltd.
Statement of Comprehensive Income
For the year ended December 2011, 2012 & 2013
Particulars 2011 % 2012 %
Revenue 3,199.38 100% 3,729.75 100%
Cost of sales -1,857.53 -58% -2,279.81 -61%
Gross profit 1,341.84 42% 1,449.95 39%
Operating expenses -520.19 -16% -582.42 -16%
Profit from operations 821.66 26% 867.53 23%
Gain on sale of lease land - -
Gain on disposal of PPE 17.6 1% 2.03 0%
Interest income, net 63.95 2% 70.58 2%
Profit before taxation 903.21 28% 940.14 25%
Taxation -235.19 -7% -258.62 -7%
Net profit for the year 668.02 21% 681.52 18%
Common-Size Income Statement of Linde BD
22. Common-Size Financial Position of Linde BD
Linde Bangladesh Ltd.
Statement of Financial Position
As at December 2011, 2012 & 2013
Particulars 2011 %
Assets
Non-current assets:
Property, plant and equipment 1,044 37.3%
Intangible assets 5 0.2%
Investment in subsidiary 0 0.0%
Total non-current/ Fixed assets 1,048 37.4%
Current assets:
Inventories 361 12.9%
Trade debtors 200 7.1%
Advances, deposits and prepayments 118 4.2%
Cash and cash equivalents 1,074 38.3%
Total current assets 1,754 62.6%
Total assets 2,802 100%
Equity and Liabilities
Shareholders’ equity:
Share capital 152 7.6%
Revaluation reserve 20 1.0%
General reserve 1,823 91.4%
Total equity 1,995 100%
Non-current liabilities:
Finance lease 0 0.0%
Employee benefits 114 4.1%
Deferred tax liabilities 65 2.3%
Other non-current liabilities 166 5.9%
Total non-current liabilities 345 12.3%
Current liabilities:
Current portion of Finance Lease 0 0.0%
Trade creditors 59 2.1%
Expense creditors and accruals 207 7.4%
Sundry creditors 55 2.0%
Provision for taxation (net of advance tax payment) 140 5.0%
Total current liabilities 461 16.5%
Total liabilities 806 28.8%
Total equity and liabilities 2,802 100%