Financial Statement Analysis: Learn The Best Tricks And Tips!Andrew Li
Learn how to read financial statements and SEC filings like an investing pro!
Also, check out the last 2 pages for an amazing and exclusive discount offer for my Udemy course on financial statement analysis!
Financial Statement Analysis: Learn The Best Tricks And Tips!Andrew Li
Learn how to read financial statements and SEC filings like an investing pro!
Also, check out the last 2 pages for an amazing and exclusive discount offer for my Udemy course on financial statement analysis!
Financial analysis for juhayna & domty co . graduation project zagzig uni...Eslam Fathi
Financial Analysis is the process of selecting, evaluating, and identifying the financial
strength and weaknesses of the firm by properly establishing relationship between
items of financial statements. Firms, bank, loan officers and business owners all use
Financial analysis to learn more about a company’s current financial health as well as its
potential.
Ratios and Formulas in Customer Financial AnalysisFinancial stat.docxcatheryncouper
Ratios and Formulas in Customer Financial Analysis
Financial statement analysis is a judgmental process. One of the primary objectives is identification of major changes in trends, and relationships and the investigation of the reasons underlying those changes. The judgment process can be improved by experience and the use of analytical tools. Probably the most widely used financial analysis technique is ratio analysis, the analysis of relationships between two or more line items on the financial statement. Financial ratios are usually expressed in percentage or times. Generally, financial ratios are calculated for the purpose of evaluating aspects of a company's operations and fall into the following categories:
· Liquidity ratios measure a firm's ability to meet its current obligations.
· Profitability ratios measure management's ability to control expenses and to earn a return on the resources committed to the business.
· Leverage ratios measure the degree of protection of suppliers of long-term funds and can also aid in judging a firm's ability to raise additional debt and its capacity to pay its liabilities on time.
· Efficiency, activity or turnover ratios provide information about management's ability to control expenses and to earn a return on the resources committed to the business.
A ratio can be computed from any pair of numbers. Given the large quantity of variables included in financial statements, a very long list of meaningful ratios can be derived. A standard list of ratios or standard computation of them does not exist. The following ratio presentation includes ratios that are most often used when evaluating the credit worthiness of a customer. Ratio analysis becomes a very personal or company driven procedure. Analysts are drawn to and use the ones they are comfortable with and understand.
1. Liquidity Ratios
Working Capital
Working capital compares current assets to current liabilities, and serves as the liquid reserve available to satisfy contingencies and uncertainties. A high working capital balance is mandated if the entity is unable to borrow on short notice. The ratio indicates the short-term solvency of a business and in determining if a firm can pay its current liabilities when due.
Formula
Current Assets - Current Liabilities
Acid Test or Quick Ratio
A measurement of the liquidity position of the business. The quick ratio compares the cash plus cash equivalents and accounts receivable to the current liabilities. The primary difference between the current ratio and the quick ratio is the quick ratio does not include inventory and prepaid expenses in the calculation. Consequently, a business's quick ratio will be lower than its current ratio. It is a stringent test of liquidity.
Formula
Cash + Marketable Securities + Accounts Receivable
Current Liabilities
Current Ratio
provides an indication of the liquidity of the business by comparing the amount of current assets to current liabilities. A business's curren ...
About
Indigenized remote control interface card suitable for MAFI system CCR equipment. Compatible for IDM8000 CCR. Backplane mounted serial and TCP/Ethernet communication module for CCR remote access. IDM 8000 CCR remote control on serial and TCP protocol.
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Technical Specifications
Indigenized remote control interface card suitable for MAFI system CCR equipment. Compatible for IDM8000 CCR. Backplane mounted serial and TCP/Ethernet communication module for CCR remote access. IDM 8000 CCR remote control on serial and TCP protocol.
Key Features
Indigenized remote control interface card suitable for MAFI system CCR equipment. Compatible for IDM8000 CCR. Backplane mounted serial and TCP/Ethernet communication module for CCR remote access. IDM 8000 CCR remote control on serial and TCP protocol.
• Remote control: Parallel or serial interface
• Compatible with MAFI CCR system
• Copatiable with IDM8000 CCR
• Compatible with Backplane mount serial communication.
• Compatible with commercial and Defence aviation CCR system.
• Remote control system for accessing CCR and allied system over serial or TCP.
• Indigenized local Support/presence in India.
Application
• Remote control: Parallel or serial interface.
• Compatible with MAFI CCR system.
• Compatible with IDM8000 CCR.
• Compatible with Backplane mount serial communication.
• Compatible with commercial and Defence aviation CCR system.
• Remote control system for accessing CCR and allied system over serial or TCP.
• Indigenized local Support/presence in India.
• Easy in configuration using DIP switches.
Immunizing Image Classifiers Against Localized Adversary Attacksgerogepatton
This paper addresses the vulnerability of deep learning models, particularly convolutional neural networks
(CNN)s, to adversarial attacks and presents a proactive training technique designed to counter them. We
introduce a novel volumization algorithm, which transforms 2D images into 3D volumetric representations.
When combined with 3D convolution and deep curriculum learning optimization (CLO), itsignificantly improves
the immunity of models against localized universal attacks by up to 40%. We evaluate our proposed approach
using contemporary CNN architectures and the modified Canadian Institute for Advanced Research (CIFAR-10
and CIFAR-100) and ImageNet Large Scale Visual Recognition Challenge (ILSVRC12) datasets, showcasing
accuracy improvements over previous techniques. The results indicate that the combination of the volumetric
input and curriculum learning holds significant promise for mitigating adversarial attacks without necessitating
adversary training.
Welcome to WIPAC Monthly the magazine brought to you by the LinkedIn Group Water Industry Process Automation & Control.
In this month's edition, along with this month's industry news to celebrate the 13 years since the group was created we have articles including
A case study of the used of Advanced Process Control at the Wastewater Treatment works at Lleida in Spain
A look back on an article on smart wastewater networks in order to see how the industry has measured up in the interim around the adoption of Digital Transformation in the Water Industry.
Saudi Arabia stands as a titan in the global energy landscape, renowned for its abundant oil and gas resources. It's the largest exporter of petroleum and holds some of the world's most significant reserves. Let's delve into the top 10 oil and gas projects shaping Saudi Arabia's energy future in 2024.
Water scarcity is the lack of fresh water resources to meet the standard water demand. There are two type of water scarcity. One is physical. The other is economic water scarcity.
2. Learning Outcomes
Explain the use of ratios can help to analyze
the profitability, liquidity, efficiency and capital
structure of business
Calculate main accounting ratios
Interpret the results of calculating accounting
ratios
Explain the investors’ choice in choosing
between shares and debentures
Explain trend analysis
Explain limitations of accounting statements
3. Topic Outlines
Profitability Ratios
1 Return on Capital Employed
(ROCE)
2 Gross Profit Margin
3 Net Profit Margin
4 Return on Assets
5 Return on Equity
Liquidity Ratios
1 Current Ratio
2 Quick Ratio/ Acid Test Ratio
3 Times Interest Earned Ratio
Efficiency Ratios
1 Inventory Turnover Ratio
2 Accounts Receivable Turnover
Ratio
3 Day Sales Outstanding
4 Accounts Payable Turnover Ratio
5 Asset Turnover Ratio
Shareholder Ratios
1 Earnings per share
2 Price/Earnings Ratio (P/E)
3 Dividend Yield
Capital Structure Ratios
1 Gearing Ratio
6. Name of Business
Income Statement for the year ended 31 December 20xx
Sales xxx
Less: COGS
Add Beginning Inventory xx
Add Purchases xx
Less Closing stocks (xx)
COGS (xxx)
Gross Profit/(loss) xxx
Less: Operating Expenses
Utilities xx
Stationaries xx
Rental xx
Insurance xx
Salary / Wages xx
Office Expenses xx
Total Operating Expenses (xxx)
Net Profit/(loss) xxx
7. Why use Ratio?
Ratio analysis is a useful management tool
that will improve your understanding of
financial results and trends over time, and
provide key indicators of organizational
performance. Managers will use ratio
analysis to pinpoint strengths and
weaknesses from which strategies and
initiatives can be formed.
8. Why use Ratio?
Company A
2017
Profit = RM25,000
2018
Profit = RM49,000
Company B
2017
Profit = RM1,675,000
2018
Profit = RM1,839,500
Which is a better company?
a) Performance
b) Value
c) Size
9. Profitability Ratio
Financial metrics that are used to assess a
business’s ability to generate earnings as
compared to its expenses and other relevant
costs incurred during a specific period of
time.
Most of these ratios, having higher value
relative to a competitor’s ratio or the same
ratio from a previous period is indicative that
the company is doing well.
How many example of ratio will be covered?
10. Return on Capital Employed
Measures a company’s profitability and the efficiency with
which its capital is employed
Capital employed is the sum shareholders’ equity and debt
liabilities (Total Assets – Current Liabilities)
Often calculated based on ‘Average Capital Employed’ which
takes the average of opening and closing capital employed
for the time period
Higher ROCE indicates more efficient use of capital ( should
be higher than the company’s capital cost, otherwise it
indicates that the company is not employing its capital
effectively and is not generating shareholder value)
Earnings Before Interest and Tax (EBIT) / Capital
Employed
11. Gross/Net Profit margin
Is the percentage of revenue after expenses have been
deducted from sales
Measurement reveals the amount of profit that a business
can extract from its total sales
Intended to be a measure of the overall success of a
business
A high profit margin indicates business is pricing its products
correctly and is exercising good cost control
Gross Profit or Net Profit / Sales
12. Return on Assets
Measures the net income produced by total assets during a
period by comparing net income to the average total assets
Measures how efficiently a company can manage its assets
to produce profits during a period
Measure how effectively a company can turn earn a return on
its investment in assets
Shows how efficiently a company can convert the money
used to purchase assets into net income or profits
Net Profit/ Total Assets
13. Return on Equity
Measures the ability of a firm to generate profits from its
shareholders investments in the company
Shows how much profit each dollar of common stockholders’
equity generates
Show how effective management is at using equity financing
( money from shareholders) to fund operations and grow the
company
Higher ROE indicates the company is using its investors'’
fund effectively
Net Income/ Equity
14. Liquidity Ratios
Determine a company’s ability to pay off its short-term debts
obligations
The higher the value of the ratio, the larger the margin of
safety that the company possesses to cover short-term debts
Analyze the ability of a company to pay off both its current
liabilities as they become due as well as their long term
liabilities as they become current
Show cash levels of a company and ability to turn other
assets into cash to pay off liabilities and other current
obligations
How many ratios will be covered?
15.
16. Current ratio
Measures a firm’s ability to pay off its short term liabilities
with its current assets
Companies with larger amounts of current assets will easily
pay off current liabilities when they become due without
having to sell long-term, revenue generating assets
Help investors and creditors understand the liquidity of a
company and how easily that a company will be able to pay
off its current liabilities
A higher current ratio more favorable than a lower current
ratio because it shows the company can easily pay current
debt
Current Assets / Current Liabilities
17. Quick ratio/ Acid Test ratio
Ability of a company to pay its current liabilities when
they come due with only quick assets
Quick assets are current assets that can be converted
to cash within 90 days or in the short term (cash, cash
equivalents, short term investments or marketable
securities and current account receivables)
Higher quick ratios more favorable because it shows
there are more quick assets than current liabilities
Current Assets – Inventory / Current Liabilities
18. Times Interest Earned ratio
Also known as interest coverage ratio
Measures the proportionate amount of income that can be
used to cover interest expenses in the future
Measures a firm’s ability to make interest and debt service
payments
Interest expenses considered to be fixed expenses, if the
company can’t make the payments, it could go bankrupt and
cease to exist
Ratio indicates how many times a company could pay the
interest with its before tax income, so larger ratios are
considered more favorable than smaller ratios
Earning before Tax and Interest/ Interest
19. Efficiency Ratio
measure a company's ability to use its assets
and manage its liabilities effectively.
20. Inventory turnover ratio
Show how effectively inventory is managed by
comparing cost of goods sold with average
inventory for a period
Measures how many times average inventory is
turned or sold during a period
Measures how many times a company sold its
total average inventory dollar amount during the
year
Cost of Good sold / Inventory
21. Account receivables turnover
ratio
Measures how many times a business can turn its
accounts receivable into cash during the period
How many times a business can collect its average
accounts receivables during the year
Show how efficient a company is collecting its credit
sales from customers
Higher efficiency is favorable from a cash flow ( the
sooner the company collect cash from customer, it will
be able to pay bills and other obligations sooner)
Sales /Average Account receivables
22. Days Sales Outstanding
Average collection period or days’ sales in receivables
Measures the number of days it takes a company to collect cash
from its credit sales
Shows the liquidity and efficiency of a company’s collections
department
Shows how well a company can collect cash from its customers
The sooner cash can be collected, the sooner this cash can be
used for other operations
Lower ratio is more favorable because it means companies collect
cash earlier from customers
365 days / Receivable Turnover ratio
23. Account payable turnover ratio
Shows a company’s ability to pay off its accounts
payable by comparing net credit purchases to the
average accounts payable during a period
Show how many times a company can pay off its
average accounts payable balance during the course
of a year
It is used by suppliers and creditors to help decide
whether or not to grant credit to business
A higher ratio shows suppliers and creditors that the
company pays its bills frequently and regularly
Purchase / Average account payable
24. Asset turnover ratio
The asset turnover ratio is an efficiency ratio that
measures a company’s ability to generate sales from its
assets by comparing net sales with average total assets.
In other words, this ratio shows how efficiently a
company can use its assets to generate sales.
The total asset turnover ratio calculates net sales as a
percentage of assets to show how many sales are
generated from each dollar of company assets. For
instance, a ratio of .5 means that each dollar of assets
generates 50 cents of sales.
Sales / total assets
25. Shareholder Ratio
The shareholder equity ratio determines how
much shareholders would receive in the event
of a company-wide liquidation.
The ratio, expressed as a percentage, is
calculated by dividing total shareholders'
equity by total assets of the firm, and it
represents the amount of assets on which
shareholders have a residual claim.
26. Earning per share
Also known as net income per share
Measures the amount of net income earned per
share of stock outstanding
Shows how profitable a company is on a shareholders
basis
Higher EPS us always better than a lower ratio
because this means the company is more profitable (
company has more profits to distribute to its
shareholders)
Higher EPS often makes the stock price of a company
rise
27. Price Earning ratio
Is a market prospect ratio that calculates the market value of
a stock relative to its earnings by comparing the market price
per share by the earnings per share
Shows what the market is willing to pay for a stock based on
its current earnings
Evaluate what a stock’s fair market value by predicting future
earnings per share (higher future earnings are expected to
issue higher dividends)
Company with higher P/E ratio indicated positive future
performance and investors are willing to pay more for this
company’s shares
Price per share / earning per share
28. Dividend Yield
Measures the amount of cash dividends distributed to
common shareholders to the market value per share
Used by investors to show how their investment in
stock is generating either cash flows in the form of
dividends or increases in asset value by stock
appreciation
Investors want to know how much dividends they are
getting for every dollar that the stock is worth
Company with high dividend yield pay its investors a
large dividend compared to the fair market value of
the stock
29. Capital Structure
Capital structure is how a firm finances its overall
operations and growth by using different sources
of funds
Debt comes in the form of bond issues or long
term notes payable, while equity is classified as
common stock, preferred stock or retained
earnings
Short term debt such as working capital
requirements also considered to be part of the
capital structure
30. Gearing ratio
Measures the proportion of a company’s borrowed funds to
its equity
Indicates the financial risk to which a business is subjected,
since excessive debt can lead to financial difficulties
A high gearing ratio represents a high proportion of debt to
equity (great deal of leverage, where company is using debt
to pay for its continuing operations)
A low gearing ratio may be indicative of conservative financial
management, but also mean a company is located in a high
cyclical industry
Long term liabilities / capital employed
31. Choosing between shares and
debentures
Lower Risk
Debenture holders have their interest paid to them whether or not
profits are made
If there is insufficient cash funds available to pay debenture
dividends, many debentures give their holders the right to sell of
some or all of the assets of the company, to recoup the amount of
their debentures before anyone else has a claim
Ranks above the shares of that same company
Medium Risk
Preference shareholders have their dividends paid after the
debenture interest has been paid, but before the ordinary
shareholders
Still dependent upon the profits being available for distribution
Highest Risk
Ordinary shareholders ( must give way to both debenture holders and
to preference shares for interest and dividends)
Ordinary shareholders ( must give way to both debenture holders and
to preference shares for interest and dividends)
However, should the remaining profits for distribution be very high
then they may get a high return on their money
32. Trend Analysis
One of the tools for the analysis of the company’s
monetary statements for the investment purposes
To determine the financial position of the business
The financial statements of the company are compared
with each other for several years after converted into
percentage form in order to compare them with each
other
Trend analysis percentage = (figure of the previous
period- figure of the current period) / total both figures
If the current-year percentages were greater than
previous year percentage (current-year result is better
33. Limitation of Accounting
statement
Impossible to sensibly compare two businesses which are
completely unlike one another
Compare a supermarket’s figures with those of a
chemical factory would be rather pointless
A lot of other factors that the past-focused financial
statements do not disclose
Desire to keep money measurement concept, objectives
will exclude great deal of desirable information
34. Comparative ratios and
benchmarking
Comparisons –a company’s ratios are
compared with those of other firms in the
same industry, that is, to industry average
figures.
Benchmarking –compare ratios with
those a smaller set of leading companies