Financial statement analysis involves analyzing the data in financial statements to provide useful information for decision making. It is used by both internal users like management for planning and control, and external users like investors and creditors to assess performance, financial position, and future prospects. Key methods of financial statement analysis include horizontal analysis, vertical analysis, common-size statements, trend percentages, and ratio analysis. Horizontal analysis involves calculating changes in items between periods in amounts and percentages. Vertical analysis expresses each item as a percentage of a total.
This document discusses long-term liabilities such as bonds and long-term notes payable. It describes the major characteristics of bonds, including types of bonds and how they are issued. It explains how to account for bond transactions such as issuing bonds at face value, a discount, or premium. It also discusses accounting for long-term notes payable, including recording mortgage notes payable. Finally, it discusses presentation of long-term liabilities on the balance sheet.
The document discusses product positioning and strategies for choosing an effective positioning approach. It defines positioning as how a product is perceived by consumers based on important attributes relative to competitors. Effective positioning differentiates a product, addresses key customer criteria, and articulates a company's characteristics. The document recommends identifying possible competitive advantages, choosing the most important, distinctive, and communicable advantages, and selecting an overall positioning strategy. It also cautions against underpositioning, overpositioning, or creating confused positioning. Finally, it stresses the need to communicate and deliver the chosen position through marketing mix efforts that support the strategy and adapt it over time.
This document discusses market segmentation and targeting. It explains that companies can divide markets into segments based on geography, demographics, psychographics, and behavior. Demographic segmentation variables include factors like age, gender, income, family size, occupation, religion and nationality. The document also provides an example of how Mead Johnson segments its market for infant nutritional products into different regions and age groups. Effective targeting requires identifying the right market segment and understanding their needs, benefits sought, and value.
The company had sales of $750,000 and cost of goods sold of $319,900, resulting in a gross profit of $430,100. Total operating expenses were $274,015, giving an operating profit of $156,085. After accounting for interest and tax expenses, the net profit was $106,634.50. Cash flow was positive, with $270,804.50 from operating activities and $250,000 from financing activities, increasing cash by $435,804.50 over the year. Total assets were $698,279.50, including current assets of $624,589.50 and fixed assets of $73,690, financed by total liabilities of $437,210.
The document discusses key marketing concepts related to identifying target markets. It defines market segmentation as dividing the total market into smaller groups with similar characteristics. Target marketing is focusing on segments with the greatest potential for sales. Market segments should be measurable, substantial, reachable, and likely to respond to promotional efforts. The document also discusses different ways to segment markets, including by geography, demographics, and behaviors.
Developing, Positioning, and Differentiating Products through the Life CycleSumit Pradhan
The document discusses the product life cycle and strategies for developing, positioning, and differentiating products. It covers the stages of the product life cycle from introduction to growth, maturity, and decline. It also discusses how marketing strategies should be tailored for each stage, such as using promotions to create awareness early on and focusing on retaining loyal customers in decline. Finally, it discusses tools for positioning and differentiating products, including features, style, services, personnel, and image.
The document discusses positioning and differentiating market offerings over the product life cycle. It identifies different types of product, service, and image differentiation attributes. It also discusses the concept of positioning and using perceptual maps. The document then covers the typical product life cycle phases of introduction, growth, maturity, and decline. It analyzes customer adoption categories and common introductory and later-stage marketing strategies used during the life cycle.
This document discusses long-term liabilities such as bonds and long-term notes payable. It describes the major characteristics of bonds, including types of bonds and how they are issued. It explains how to account for bond transactions such as issuing bonds at face value, a discount, or premium. It also discusses accounting for long-term notes payable, including recording mortgage notes payable. Finally, it discusses presentation of long-term liabilities on the balance sheet.
The document discusses product positioning and strategies for choosing an effective positioning approach. It defines positioning as how a product is perceived by consumers based on important attributes relative to competitors. Effective positioning differentiates a product, addresses key customer criteria, and articulates a company's characteristics. The document recommends identifying possible competitive advantages, choosing the most important, distinctive, and communicable advantages, and selecting an overall positioning strategy. It also cautions against underpositioning, overpositioning, or creating confused positioning. Finally, it stresses the need to communicate and deliver the chosen position through marketing mix efforts that support the strategy and adapt it over time.
This document discusses market segmentation and targeting. It explains that companies can divide markets into segments based on geography, demographics, psychographics, and behavior. Demographic segmentation variables include factors like age, gender, income, family size, occupation, religion and nationality. The document also provides an example of how Mead Johnson segments its market for infant nutritional products into different regions and age groups. Effective targeting requires identifying the right market segment and understanding their needs, benefits sought, and value.
The company had sales of $750,000 and cost of goods sold of $319,900, resulting in a gross profit of $430,100. Total operating expenses were $274,015, giving an operating profit of $156,085. After accounting for interest and tax expenses, the net profit was $106,634.50. Cash flow was positive, with $270,804.50 from operating activities and $250,000 from financing activities, increasing cash by $435,804.50 over the year. Total assets were $698,279.50, including current assets of $624,589.50 and fixed assets of $73,690, financed by total liabilities of $437,210.
The document discusses key marketing concepts related to identifying target markets. It defines market segmentation as dividing the total market into smaller groups with similar characteristics. Target marketing is focusing on segments with the greatest potential for sales. Market segments should be measurable, substantial, reachable, and likely to respond to promotional efforts. The document also discusses different ways to segment markets, including by geography, demographics, and behaviors.
Developing, Positioning, and Differentiating Products through the Life CycleSumit Pradhan
The document discusses the product life cycle and strategies for developing, positioning, and differentiating products. It covers the stages of the product life cycle from introduction to growth, maturity, and decline. It also discusses how marketing strategies should be tailored for each stage, such as using promotions to create awareness early on and focusing on retaining loyal customers in decline. Finally, it discusses tools for positioning and differentiating products, including features, style, services, personnel, and image.
The document discusses positioning and differentiating market offerings over the product life cycle. It identifies different types of product, service, and image differentiation attributes. It also discusses the concept of positioning and using perceptual maps. The document then covers the typical product life cycle phases of introduction, growth, maturity, and decline. It analyzes customer adoption categories and common introductory and later-stage marketing strategies used during the life cycle.
The document discusses key aspects of designing and managing services, and marketing them effectively. It defines services as intangible acts or performances that do not result in ownership. Services are categorized based on tangibility of goods, equipment or people-based processes, client presence, personal or business needs, and objectives. The four characteristics of services are intangibility, inseparability, variability and perishability. Best practices for quality management include strategic focus on customers, top management commitment, high standards, self-service technologies, and monitoring systems. Ten keys to improving quality are listening, reliability, basic service, service design, recovery, surprising customers, fair play, teamwork, employee research, and servant leadership. Superior service requires meeting expectations
This document discusses market segmentation and targeting. It defines market segments as groups of customers who share similar needs and wants. There are four main types of market segmentation: geographic, demographic, psychographic, and behavioral. Demographic variables include age, gender, income, etc. Psychographic segmentation groups customers based on personality traits and values. Behavioral segmentation divides customers based on usage patterns and brand loyalty. The document also discusses criteria for evaluating market segments and different targeting strategies like full market coverage, multiple segment specialization, and single segment concentration.
This document discusses business markets and organizational buying. It covers key differences between business and consumer markets. The business buying process involves multiple roles and stages. Buyers consider various factors like price, quality, and relationships. Suppliers build trust and collaborate with buyers to establish long-term relationships. Various research methods and tools help understand customer needs better to improve the buying and decision process.
This document discusses service marketing management. It defines categories of service mixes and characteristics of services. It also discusses challenges in services like inseparability, perishability, intangibility and variability. The document talks about three types of marketing for service industries and ways to improve service differentiation, quality and productivity. It introduces a service quality model and determinants of service quality. It provides strategies for service excellence like top management commitment and satisfying customer complaints.
This chapter discusses positioning and differentiating products through the product life cycle. It covers developing an effective positioning strategy, differentiating products using various attributes, and adapting marketing strategies to each stage of the product and market life cycles. The key stages of the product life cycle are introduction, growth, maturity, and decline, each requiring different marketing approaches. It also discusses segmenting markets and adapting to market evolution from growth to maturity and decline.
This document discusses market segmentation, targeting, and positioning. It defines market segmentation as dividing the total market into homogeneous groups. There are several bases for segmenting markets, including geographic, demographic, psychographic, and behavioral variables. The advantages of segmentation include designing tailored marketing mixes for each segment. Effective segmentation requires segments to be measurable, substantial, accessible, differential, and actionable. Targeting involves evaluating segment attractiveness and selecting segments to target. Positioning is designing a company's offering and image to occupy a distinctive place in consumers' minds relative to competitors.
The document discusses the nature and characteristics of services, including intangibility, inseparability, variability, and perishability. It outlines strategies for managing demand and supply for services. Marketing strategies for services are described, including managing differentiation, quality, and productivity. Key gaps that can cause service delivery failures are identified. Effective service firms share characteristics like top management commitment, high standards, monitoring, and customer/employee satisfaction. The document concludes with strategies for managing product support services.
The document discusses market segmentation, targeting, and positioning. It describes identifying distinct customer groups based on needs and selecting target segments. There are several bases for segmenting consumer and business markets such as demographics, behaviors, and firmographics. Effective segmentation results in segments that are measurable, accessible, substantial, and responsive to different marketing strategies. Companies evaluate segment attractiveness based on size, growth, industry forces, and their objectives and resources to determine which target segments to enter.
Analyzing Business Markets and Buyer BehaviorSumit Pradhan
The document discusses organizational buying and business markets. It identifies key differences between business and consumer markets, such as business markets having fewer, larger, and more geographically concentrated buyers with close supplier relationships. It also outlines the buying situations organizations face, from routine reorders to new tasks, and identifies participants in the business buying process and major influences on organizational buying decisions, including environmental, organizational, interpersonal, and individual factors.
The document discusses the nature and characteristics of services. It notes that services are intangible, inseparable, variable, and perishable. It also discusses the distinctive characteristics of services like intangibility where services cannot be seen before purchase. It discusses how marketers can address these characteristics through strategies like standardizing service delivery to reduce variability. The document also discusses marketing strategies for services, noting people, physical evidence, and process must be considered in addition to the traditional 4Ps. It emphasizes the importance of internal marketing to train employees.
Analyzing Business Markets and Business BehaviorSein Sei
Analyzing Business Markets and Business Behavior
Organizational Buying
Organizational buying is the decision making process by which formal organizations establish the need for purchased products and services, identify, evaluate, and choose among alternative brands and suppliers.
Business Market
Business Market consists of all the organizations that acquire goods and services used in the production of other products and services that are sold, rented or supplied to others.
Characteristics of Business Market
Consumer Markets
Consumer markets are the markets for products and services bought by individuals for their own or family use.
Buying Center
The Buying Center: is the decision-making unit of a buying organization consists of all those individuals and groups who participate in the purchasing decisions making process, who share some common goals and the risk arising from the decisions.
Institutional Markets
Institutional markets consist of schools, hospitals, nursing homes, prisons and other institutions that must provide goods n services to people in their care. These are characterized by low budgets and captive clienteles. The focus here is on quality and cost minimization and profit are not objectives.
Characteristics :
Governments invite bids for contracts and award to lowest bidder.
Might make exceptions for superior quality or reputation
Favor domestic suppliers over foreign ones
Governments have a lot of red tape and bureaucracy which tends to put off most people from doing business with them
Government Markets
Governments have traditionally never seen a whole package – but have always bargained on price and used that as a decision factor. They are moving towards web based procurement and more transparency in their dealings. Marketing people have realized that where product features are advertised, differentiation doesn’t really help and similarly for price as well.
The document discusses various factors in a company's marketing environment, including the microenvironment and macroenvironment. It describes key elements of the microenvironment like suppliers, marketing intermediaries, customers and competitors. It then explains factors in the macroenvironment such as demographic trends, economic conditions, natural environment, technological changes, and political/cultural influences. The document emphasizes how marketers must understand and respond proactively to changes in the various environmental factors.
The document defines business markets and how they differ from consumer markets. It identifies major factors that influence business buyer behavior such as environmental, organizational, interpersonal, and individual factors. It also lists and defines the typical steps in a business buying decision process which includes problem recognition, need description, specification, supplier search, proposal solicitation, selection, ordering, and performance review. It compares institutional markets which provide goods and services to people in care facilities with low budgets to government markets which require bids and favor domestic suppliers.
The document discusses the various internal and external factors that make up a company's marketing environment and how they can influence marketing strategies. It describes the microenvironment which includes factors close to the company like customers, suppliers, competitors. It also describes the macroenvironment which includes broader forces like demographic, economic, technological, political and cultural factors. It emphasizes the importance of environmental scanning and analysis to understand opportunities and threats from the changing marketing environment.
The document analyzes the business and financial performance of Panasonic and Sony over the period of 2008 to 2011. It includes sections on information gathering, accounting techniques used, and an analysis of the companies' financial performance based on ratios calculated from income statements, balance sheets, and cash flow statements. Key metrics examined include profitability, asset utilization, working capital, debt levels, and changes in owners' equity. The analysis provides a comparison of the financial positions and performance trends of the two electronics companies over the three-year period.
The document discusses the marketing environment and its internal and external factors. It defines the marketing environment and separates it into micro and macro environments. The microenvironment includes controllable factors like the company, suppliers, customers, competitors, and public groups. The macro environment includes less controllable demographic, economic, technological, political, ecological, and sociocultural factors that affect marketing decisions. All of these internal and external forces must be considered when developing marketing strategies.
The document discusses the marketing environment and challenges faced by McDonald's. It describes McDonald's initiatives to address shifting consumer lifestyles by focusing on consistent products and reliable service while also offering upscale options like McCafe. McDonald's introduced healthier options by eliminating supersized items and adding active meal options for adults. The document provides an overview of the internal and external factors in a company's micro and macro marketing environment.
The Perils of Perception in 2015: Ipsos MORIIpsos UK
People across 33 countries hold inaccurate perceptions about several key statistics and issues in their own countries. In general, respondents overestimate the wealth of the top 1%, the level of immigration, religious non-affiliation, and the proportion of overweight/obese individuals. They also overestimate things like the average age, youth living at home, and those under 14. Perceptions are least accurate around wealth distribution, religious affiliation, and weight statistics.
Financial statement analysis involves analyzing a company's financial statements to assess its performance and financial position. It is used to evaluate factors like profitability, solvency, liquidity, and efficiency. Key tools for financial statement analysis include financial ratios, common size analysis, trend analysis, and comparisons to industry standards and past performance. The purpose is to provide useful information to decision makers about a company's historical performance, current condition, and future prospects.
Internal and external users analyze financial statements to assess a company's performance and financial position. Internal users use it for planning, evaluating, and controlling operations, while external users assess past performance, current financial position, and future profitability and solvency. Methods for analyzing financial statements include horizontal analysis, vertical analysis, common-size statements, trend percentages, and ratio analysis. Ratio analysis specifically uses liquidity, equity, profitability, and market ratios to evaluate a company's financial health.
The document provides information on various financial statement analysis techniques including horizontal analysis, vertical analysis, trend percentages, and ratio analysis. It includes examples of applying each technique to sample financial statements. Specifically, it provides a 3-year income statement and calculates trend percentages to analyze changes over time. It also includes a horizontal analysis example comparing 2 years of balance sheet data. Finally, it discusses various common financial ratios used in analysis and calculates several ratios for Norton Corporation using provided financial information.
This document provides an overview of financial statement analysis techniques including horizontal analysis, vertical analysis, common-size statements, trend percentages, and ratio analysis. It includes examples of each technique applied to comparative financial statements for Clover Corporation and Sample Company. The horizontal analysis example calculates dollar and percentage changes in the balance sheet and income statement line items between years. The vertical analysis example expresses each financial statement line item as a percentage of a total. The trend percentages example calculates the percentage change in revenues, expenses, and net income from the base year.
The document discusses key aspects of designing and managing services, and marketing them effectively. It defines services as intangible acts or performances that do not result in ownership. Services are categorized based on tangibility of goods, equipment or people-based processes, client presence, personal or business needs, and objectives. The four characteristics of services are intangibility, inseparability, variability and perishability. Best practices for quality management include strategic focus on customers, top management commitment, high standards, self-service technologies, and monitoring systems. Ten keys to improving quality are listening, reliability, basic service, service design, recovery, surprising customers, fair play, teamwork, employee research, and servant leadership. Superior service requires meeting expectations
This document discusses market segmentation and targeting. It defines market segments as groups of customers who share similar needs and wants. There are four main types of market segmentation: geographic, demographic, psychographic, and behavioral. Demographic variables include age, gender, income, etc. Psychographic segmentation groups customers based on personality traits and values. Behavioral segmentation divides customers based on usage patterns and brand loyalty. The document also discusses criteria for evaluating market segments and different targeting strategies like full market coverage, multiple segment specialization, and single segment concentration.
This document discusses business markets and organizational buying. It covers key differences between business and consumer markets. The business buying process involves multiple roles and stages. Buyers consider various factors like price, quality, and relationships. Suppliers build trust and collaborate with buyers to establish long-term relationships. Various research methods and tools help understand customer needs better to improve the buying and decision process.
This document discusses service marketing management. It defines categories of service mixes and characteristics of services. It also discusses challenges in services like inseparability, perishability, intangibility and variability. The document talks about three types of marketing for service industries and ways to improve service differentiation, quality and productivity. It introduces a service quality model and determinants of service quality. It provides strategies for service excellence like top management commitment and satisfying customer complaints.
This chapter discusses positioning and differentiating products through the product life cycle. It covers developing an effective positioning strategy, differentiating products using various attributes, and adapting marketing strategies to each stage of the product and market life cycles. The key stages of the product life cycle are introduction, growth, maturity, and decline, each requiring different marketing approaches. It also discusses segmenting markets and adapting to market evolution from growth to maturity and decline.
This document discusses market segmentation, targeting, and positioning. It defines market segmentation as dividing the total market into homogeneous groups. There are several bases for segmenting markets, including geographic, demographic, psychographic, and behavioral variables. The advantages of segmentation include designing tailored marketing mixes for each segment. Effective segmentation requires segments to be measurable, substantial, accessible, differential, and actionable. Targeting involves evaluating segment attractiveness and selecting segments to target. Positioning is designing a company's offering and image to occupy a distinctive place in consumers' minds relative to competitors.
The document discusses the nature and characteristics of services, including intangibility, inseparability, variability, and perishability. It outlines strategies for managing demand and supply for services. Marketing strategies for services are described, including managing differentiation, quality, and productivity. Key gaps that can cause service delivery failures are identified. Effective service firms share characteristics like top management commitment, high standards, monitoring, and customer/employee satisfaction. The document concludes with strategies for managing product support services.
The document discusses market segmentation, targeting, and positioning. It describes identifying distinct customer groups based on needs and selecting target segments. There are several bases for segmenting consumer and business markets such as demographics, behaviors, and firmographics. Effective segmentation results in segments that are measurable, accessible, substantial, and responsive to different marketing strategies. Companies evaluate segment attractiveness based on size, growth, industry forces, and their objectives and resources to determine which target segments to enter.
Analyzing Business Markets and Buyer BehaviorSumit Pradhan
The document discusses organizational buying and business markets. It identifies key differences between business and consumer markets, such as business markets having fewer, larger, and more geographically concentrated buyers with close supplier relationships. It also outlines the buying situations organizations face, from routine reorders to new tasks, and identifies participants in the business buying process and major influences on organizational buying decisions, including environmental, organizational, interpersonal, and individual factors.
The document discusses the nature and characteristics of services. It notes that services are intangible, inseparable, variable, and perishable. It also discusses the distinctive characteristics of services like intangibility where services cannot be seen before purchase. It discusses how marketers can address these characteristics through strategies like standardizing service delivery to reduce variability. The document also discusses marketing strategies for services, noting people, physical evidence, and process must be considered in addition to the traditional 4Ps. It emphasizes the importance of internal marketing to train employees.
Analyzing Business Markets and Business BehaviorSein Sei
Analyzing Business Markets and Business Behavior
Organizational Buying
Organizational buying is the decision making process by which formal organizations establish the need for purchased products and services, identify, evaluate, and choose among alternative brands and suppliers.
Business Market
Business Market consists of all the organizations that acquire goods and services used in the production of other products and services that are sold, rented or supplied to others.
Characteristics of Business Market
Consumer Markets
Consumer markets are the markets for products and services bought by individuals for their own or family use.
Buying Center
The Buying Center: is the decision-making unit of a buying organization consists of all those individuals and groups who participate in the purchasing decisions making process, who share some common goals and the risk arising from the decisions.
Institutional Markets
Institutional markets consist of schools, hospitals, nursing homes, prisons and other institutions that must provide goods n services to people in their care. These are characterized by low budgets and captive clienteles. The focus here is on quality and cost minimization and profit are not objectives.
Characteristics :
Governments invite bids for contracts and award to lowest bidder.
Might make exceptions for superior quality or reputation
Favor domestic suppliers over foreign ones
Governments have a lot of red tape and bureaucracy which tends to put off most people from doing business with them
Government Markets
Governments have traditionally never seen a whole package – but have always bargained on price and used that as a decision factor. They are moving towards web based procurement and more transparency in their dealings. Marketing people have realized that where product features are advertised, differentiation doesn’t really help and similarly for price as well.
The document discusses various factors in a company's marketing environment, including the microenvironment and macroenvironment. It describes key elements of the microenvironment like suppliers, marketing intermediaries, customers and competitors. It then explains factors in the macroenvironment such as demographic trends, economic conditions, natural environment, technological changes, and political/cultural influences. The document emphasizes how marketers must understand and respond proactively to changes in the various environmental factors.
The document defines business markets and how they differ from consumer markets. It identifies major factors that influence business buyer behavior such as environmental, organizational, interpersonal, and individual factors. It also lists and defines the typical steps in a business buying decision process which includes problem recognition, need description, specification, supplier search, proposal solicitation, selection, ordering, and performance review. It compares institutional markets which provide goods and services to people in care facilities with low budgets to government markets which require bids and favor domestic suppliers.
The document discusses the various internal and external factors that make up a company's marketing environment and how they can influence marketing strategies. It describes the microenvironment which includes factors close to the company like customers, suppliers, competitors. It also describes the macroenvironment which includes broader forces like demographic, economic, technological, political and cultural factors. It emphasizes the importance of environmental scanning and analysis to understand opportunities and threats from the changing marketing environment.
The document analyzes the business and financial performance of Panasonic and Sony over the period of 2008 to 2011. It includes sections on information gathering, accounting techniques used, and an analysis of the companies' financial performance based on ratios calculated from income statements, balance sheets, and cash flow statements. Key metrics examined include profitability, asset utilization, working capital, debt levels, and changes in owners' equity. The analysis provides a comparison of the financial positions and performance trends of the two electronics companies over the three-year period.
The document discusses the marketing environment and its internal and external factors. It defines the marketing environment and separates it into micro and macro environments. The microenvironment includes controllable factors like the company, suppliers, customers, competitors, and public groups. The macro environment includes less controllable demographic, economic, technological, political, ecological, and sociocultural factors that affect marketing decisions. All of these internal and external forces must be considered when developing marketing strategies.
The document discusses the marketing environment and challenges faced by McDonald's. It describes McDonald's initiatives to address shifting consumer lifestyles by focusing on consistent products and reliable service while also offering upscale options like McCafe. McDonald's introduced healthier options by eliminating supersized items and adding active meal options for adults. The document provides an overview of the internal and external factors in a company's micro and macro marketing environment.
The Perils of Perception in 2015: Ipsos MORIIpsos UK
People across 33 countries hold inaccurate perceptions about several key statistics and issues in their own countries. In general, respondents overestimate the wealth of the top 1%, the level of immigration, religious non-affiliation, and the proportion of overweight/obese individuals. They also overestimate things like the average age, youth living at home, and those under 14. Perceptions are least accurate around wealth distribution, religious affiliation, and weight statistics.
Financial statement analysis involves analyzing a company's financial statements to assess its performance and financial position. It is used to evaluate factors like profitability, solvency, liquidity, and efficiency. Key tools for financial statement analysis include financial ratios, common size analysis, trend analysis, and comparisons to industry standards and past performance. The purpose is to provide useful information to decision makers about a company's historical performance, current condition, and future prospects.
Internal and external users analyze financial statements to assess a company's performance and financial position. Internal users use it for planning, evaluating, and controlling operations, while external users assess past performance, current financial position, and future profitability and solvency. Methods for analyzing financial statements include horizontal analysis, vertical analysis, common-size statements, trend percentages, and ratio analysis. Ratio analysis specifically uses liquidity, equity, profitability, and market ratios to evaluate a company's financial health.
The document provides information on various financial statement analysis techniques including horizontal analysis, vertical analysis, trend percentages, and ratio analysis. It includes examples of applying each technique to sample financial statements. Specifically, it provides a 3-year income statement and calculates trend percentages to analyze changes over time. It also includes a horizontal analysis example comparing 2 years of balance sheet data. Finally, it discusses various common financial ratios used in analysis and calculates several ratios for Norton Corporation using provided financial information.
This document provides an overview of financial statement analysis techniques including horizontal analysis, vertical analysis, common-size statements, trend percentages, and ratio analysis. It includes examples of each technique applied to comparative financial statements for Clover Corporation and Sample Company. The horizontal analysis example calculates dollar and percentage changes in the balance sheet and income statement line items between years. The vertical analysis example expresses each financial statement line item as a percentage of a total. The trend percentages example calculates the percentage change in revenues, expenses, and net income from the base year.
The document provides an overview of various methods for analyzing financial statements, including horizontal analysis, vertical analysis, common-size statements, trend percentages, and ratio analysis. It provides examples of each type of analysis using sample financial statement data from fictional companies. Horizontal analysis involves calculating dollar or percentage changes in items from one period to the next. Vertical analysis expresses each financial statement item as a percentage of a total. Trend percentages show changes over time. Ratio analysis expresses logical relationships between financial statement items.
The document discusses various methods for analyzing financial statements, including horizontal analysis, vertical analysis, common-size statements, trend percentages, and ratio analysis. It provides examples of each method. For horizontal analysis, it shows an example of analyzing changes in dollar amounts and percentages for items on a company's balance sheet between two years. For vertical analysis, it demonstrates expressing each item on the balance sheet as a percentage of total assets. For trend percentages, it shows calculating growth rates for a company's revenues, expenses, and net income over five years.
ANALYSIS OF FINANCIAL STATEMENTS ch# 03KaleemSarwar2
This document discusses various tools and techniques for analyzing financial statements, including ratio analysis. It explains that ratio analysis involves expressing logical relationships between financial statement items through calculations like percentages. Some common ratios mentioned include current ratio, quick ratio, inventory turnover, debt ratio, and times interest earned. The document also categorizes ratios and discusses what types of questions different ratios can help answer regarding a company's liquidity, asset management, debt, profitability, and market value.
This document provides an overview of financial statement analysis techniques including horizontal analysis, vertical analysis, common-size statements, trend percentages, and ratio analysis. It discusses various liquidity, profitability, and market ratios and provides an example of calculating ratios for Norton Corporation using information from their financial statements. Key ratios discussed include the current ratio, acid-test ratio, accounts receivable turnover, inventory turnover, equity ratio, return on sales, and return on equity.
This document provides an overview of financial statement analysis and various methods used for analysis. It discusses the key users and purposes of analysis, as well as common analysis techniques like horizontal analysis, vertical analysis, trend analysis, and ratio analysis. It then provides an example of calculating ratios for a company called Norton Corporation using information from their financial statements.
Financial statement analysis (or financial analysis) is the process of reviewing and analyzing a company's financial statements. These statements include the Income Statement, Balance Sheet, and Statement of Cash Flows. Financial statement analysis is a method or process involving specific techniques for evaluating risks, financial health, and future prospects of an organization. It is used by investors, stakeholders, the public, and decisionmakers within the organization. Popular methods of financial statement analysis include horizontal and vertical analysis and the use of financial ratios.
This document discusses techniques for financial statement analysis and evaluating corporate performance. It introduces various types of financial ratios used to analyze liquidity, asset management, financial leverage, profitability, market performance, and dividend policy. These ratios are calculated using information from a company's balance sheet, income statement, and statement of cash flows. The document also discusses other tools for financial analysis, such as common-sized statements, DuPont analysis, market value added, and economic value added. Quality financial reporting and analysis helps management, investors, and other stakeholders accurately evaluate a company's performance.
This document discusses financial forecasting and related concepts. It covers:
1. Financial planning involves projecting profit/loss, balance sheets, and evaluating current/future financial conditions and funding requirements.
2. Key aspects of financial planning include evaluating current conditions, analyzing growth options, projecting future performance, and choosing financing options.
3. Financial forecasting models help establish relationships between variables to facilitate the planning process. Inputs, models, and outputs are key components.
4. Common forecasting techniques include pro forma financial statements, cash budgets, sales budgets, and production budgets. Percent of sales and budgeted expense methods are used to project pro forma statements.
Financial analysis involves identifying the financial strengths and weaknesses of a firm through examining relationships between items in financial statements. It is used by various stakeholders like creditors, investors, and management. Financial statement analysis compares and interprets financial data over multiple periods to evaluate past performance, current financial position, and predict future performance. There are various techniques used in financial statement analysis including comparative statements analysis, common-size statements, ratio analysis, and trend analysis.
This document discusses various types of financial statements and tools for analyzing them. It describes classified, comparative, and consolidated financial statements and how they are designed for analysis. It also outlines tools such as dollar and percentage changes, trend percentages, component percentages, ratios, and analysis of quality of earnings, assets, and debt levels that can be used to evaluate financial performance.
Acc mgt noreen13 how well am i doing statement of cash flowsJudianto Nugroho
- Ed's Pizza Hut prepared a statement of cash flows using the indirect method to analyze its cash flows for the year.
- Key elements included classifying changes in balance sheet accounts as either sources or uses of cash, and adjusting net income for non-cash expenses like depreciation.
- The statement showed a net cash outflow from operating activities after adjusting net loss for changes in current assets and liabilities. It also analyzed cash flows from investing and financing activities.
This document provides an overview of financial statement analysis for healthcare organizations. It discusses various tools used for analysis, including horizontal analysis, vertical analysis, ratio analysis, and trend analysis. Horizontal analysis compares financial data over time, vertical analysis expresses figures as percentages of a total, ratio analysis examines relationships between figures, and trend analysis compares figures to a base year. The document also outlines common liquidity, profitability, activity, and capital structure ratios used in analysis and provides examples of applying various tools to sample financial statements.
This document summarizes different types of financial statement analysis including percentage, ratio, horizontal, and vertical analysis. It discusses various liquidity, profitability, efficiency, and solvency ratios that are used in financial statement analysis such as current ratio, acid test ratio, profit margin, return on assets, inventory turnover, and debt ratio. The document provides examples of how to calculate each type of ratio using financial data from sample company statements.
Introduction ot Mangerial Finance - Chapter 2 by: Scott Besley & Eugene BrighamKenji Silavi
This document discusses financial statement analysis. It provides an overview of key financial statements including the balance sheet, income statement, statement of cash flows, and statement of retained earnings. It then analyzes these statements for a company called Unilate Textiles, calculating various financial ratios to evaluate Unilate's liquidity, asset management, debt management, profitability, and market value. The DuPont analysis is also explained as a way to analyze return on assets and return on equity. Finally, potential problems with financial ratio analysis are discussed.
MGMT 31000
Financial Management
CHAPTER 3:
Working with Financial
Statements
Agenda
1. Cash Flow and Financial Statements: A
Closer Look
Understand sources and uses of cash
2. Ratio Analysis
Know how to compute and interpret important
financial ratios
3. The Du Pont Identity
Be able to compute and interpret the Du Pont
Identity
MGMT 31000 - Financial
Management
2
Sources and Uses of Cash
Sources
1. Cash inflow – occurs when we “sell” something
2. Decrease in asset account
Accounts receivable, inventory, and net fixed assets
3. Increase in liability or equity account
Accounts payable, other current liabilities, and common stock
Uses
1. Cash outflow – occurs when we “buy” something
2. Increase in asset account
Cash and other current assets
3. Decrease in liability or equity account
Notes payable and long-term debt
MGMT 31000 - Financial
Management
3
MGMT 31000 - Financial
Management
4
Source vs. Use?
Source Use
Increase in accounts payable √
Increase in accounts receivable √
Decrease in notes payable √
Increase in retained earnings √
Increase in common stock √
Net fixed assets acquisitions √
Decrease in inventory √
Decrease in long-term debt √
MGMT 31000 - Financial
Management
5
MGMT 31000 - Financial
Management
6
2. Ratio Analysis
The goal of ratio analysis is to take the numerous
lines from both the income statement and balance sheet
and to interpret this information in a meaningful way.
There is simply too much information to grasp at
one time.
Ratios allow for better comparison through time or
between companies
As we look at each ratio, ask yourself what the ratio is
trying to measure and why that information is important
Ratios are used both internally and externally
MGMT 31000 - Financial
Management
7
Categories of Ratios
Short-term solvency or liquidity ratios
The ability to pay bills in the short-run
Long-term solvency or financial leverage ratios
The ability to meet long-term obligations
Asset management or turnover ratios
Efficiency of asset use
Profitability ratios
Efficiency of operations and how that translates to
profit
Valuation ratios
The MV of the firm relative to the BV
MGMT 31000 - Financial
Management
8
Categories of Financial Ratios
3-9
Short-term Solvency Ratios
Current Ratio: Ability to pay current liabilities
Quick Ratio: Ability to pay current liabilities without
converting inventory to sales
Cash Ratio: Ability to pay current liabilities with cash on hand
sLiabilitieCurrent
AssetsCurrent
RatioCurrent
sLiabilitieCurrent
Inventory)-Assets(Current
RatioQuick
sLiabilitieCurrent
Cash
RatioCash
10 MGMT 31000 - Financial
Management
Long-term Solvency Ratios
Total Debt Ratio: Measure of all debts and maturities
Debt-Equity Ratio: Use of debt and equity in capital st ...
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Tom Evans, Managing Director of Retirement, Canada Life
Steve Groves, Chair, Key Retirement Group
Tish Hanifan, Founder and Joint Chair of the Society of Later life Advisers
Sue Lewis, ILC Trustee
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Daniela Silcock, Head of Policy Research, Pensions Policy Institute
David Sinclair, Chief Executive, ILC
Jordi Skilbeck, Senior Policy Advisor, Pensions and Lifetime Savings Association
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Jackie Wells, Strategy and Policy Consultant, ILC Strategic Advisory Board
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The various stages, after the initial invitation has been made to the public ...
financial analysis
1. 17-1
ANALYSIS AND
INTERPRETATION OF
FINANCIAL STATEMENTS
2. 17-2
Financial Statement Analysis
Financial Statement Analysis will help
business owners and other interested
people to analyse the data in financial
statements to provide them with better
information about such key factors for
decision making and ultimate business
survival.
3. 17-3
Financial Statement Analysis
Who analyzes financial statements?
Internal users (i.e., management)
External users (emphasis of chapter)
Examples?
Investors, creditors, regulatory agencies & …
stock market analysts and
auditors
4. 17-4
Financial Statement Analysis
What do internal users use it for?
Planning, evaluating and controlling
company operations
What do external users use it for?
Assessing past performance and current
financial position and making predictions
about the future profitability and solvency
of the company as well as evaluating the
effectiveness of management
5. 17-5
Financial Statement Analysis
Information is available from
Published annual reports
(1) Financial statements
(2) Notes to financial statements
(3) Letters to shareholders
(4) Auditor’s report
(5) Management’s discussion and
analysis
Reports filed with the government
e.g., Form 10-K, Form 10-Q and Form 8-K
6. 17-6
Financial Statement Analysis
Information is available from
Other sources
(1) Newspapers (e.g., Journal
ledger )
(2) Periodicals (e.g. Forbes, Fortune)
(3) Financial information
organizations such
as:
Moody’s, Standard & Poor’s, Dun &
Bradstreet, Inc., and Robert Morris
7. Methods of
17-7
Financial Statement Analysis
Horizontal Analysis
Vertical Analysis
Common-Size Statements
Trend Percentages
Ratio Analysis
8. 17-8
Horizontal Analysis
Using comparative financial
Using comparative financial
statements to calculate amount
statements to calculate amount
or percentage changes in a
or percentage changes in a
financial statement item from
financial statement item from
one period to the next
one period to the next
9. 17-9
Vertical Analysis
For a single financial
For a single financial
statement, each item
statement, each item
is expressed as a
is expressed as a
percentage of a
percentage of a
significant total,
significant total,
e.g., all income
e.g., all income
statement items are
statement items are
expressed as a
expressed as a
percentage of sales
percentage of sales
10. 17-10
Common-Size Statements
Financial statements that show
Financial statements that show
only percentages and no
only percentages and no
absolute amounts
absolute amounts
11. 17-11
Trend Percentages
Show changes over time in
Show changes over time in
given financial statement items
given financial statement items
(can help evaluate financial
(can help evaluate financial
information of several years)
information of several years)
12. 17-12
Ratio Analysis
Expression of logical relationships
Expression of logical relationships
between items in a financial
between items in a financial
statement of a single period
statement of a single period
(e.g., percentage relationship
(e.g., percentage relationship
between revenue and net income)
between revenue and net income)
13. 17-13
Horizontal Analysis Example
The management of Clover Company
provides you with comparative balance
sheets of the years ended December 31,
1999 and 1998. Management asks you to
prepare a horizontal analysis on the
information.
16. 17-16
Horizontal Analysis Example
Calculating Change in Dollar Amounts
Dollar Current Year Base Year
= –
Change Figure Figure
Since we are measuring the amount of
the change between 1998 and 1999, the
Rupees amounts for 1998 become the
“base” year figures.
24. 17-24
CLOVER CORPORATION
Comparative Income Statements
For the Years Ended December 31, 1999 and 1998
Increase (Decrease)
1999 1998 Amount %
Net sales $ 520,000 $ 480,000 $ 40,000 8.3
Cost of goods sold 360,000 315,000 45,000 14.3
Gross margin 160,000 165,000 (5,000) (3.0)
Operating expenses 128,600 126,000 2,600 2.1
Net operating income 31,400 39,000 (7,600) (19.5)
Interest expense 6,400 7,000 (600) (8.6)
Net income before taxes 25,000 32,000 (7,000) (21.9)
Less income taxes (30%) 7,500 9,600 (2,100) (21.9)
Net income $ 17,500 $ 22,400 $ (4,900) (21.9)
25. 17-25
CLOVER CORPORATION
Comparative Income Statements
For the Years Ended December 31, 1999 and 1998
Increase (Decrease)
1999 1998 Amount %
Net sales $ 520,000 $ 480,000 $ 40,000 8.3
Cost of goods sold 360,000 315,000 45,000 14.3
Gross margin 160,000 165,000 (5,000) (3.0)
Operating expenses 128,600 126,000 2,600 2.1
Net operating income 31,400 39,000 (7,600) (19.5)
Interest expense 6,400 7,000 (600) (8.6)
Net income before taxes 25,000 32,000 (7,000) (21.9)
Less income taxes (30%) 7,500 9,600 (2,100) (21.9)
Net income $ 17,500 $ 22,400 $ (4,900) (21.9)
Sales increased by 8.3% while net
income decreased by 21.9%.
26. 17-26
There were increases in both cost of goods
sold (14.3%) and operating expenses (2.1%).
These increased costs more than offset the
CLOVER CORPORATION
increase in sales, yielding an overall
Comparative Income Statements
decrease in net income.
For the Years Ended December 31, 1999 and 1998
Increase (Decrease)
1999 1998 Amount %
Net sales $ 520,000 $ 480,000 $ 40,000 8.3
Cost of goods sold 360,000 315,000 45,000 14.3
Gross margin 160,000 165,000 (5,000) (3.0)
Operating expenses 128,600 126,000 2,600 2.1
Net operating income 31,400 39,000 (7,600) (19.5)
Interest expense 6,400 7,000 (600) (8.6)
Net income before taxes 25,000 32,000 (7,000) (21.9)
Less income taxes (30%) 7,500 9,600 (2,100) (21.9)
Net income $ 17,500 $ 22,400 $ (4,900) (21.9)
27. 17-27
Vertical Analysis Example
The management of Sample Company asks
you to prepare a vertical analysis for the
comparative balance sheets of the
company.
31. 17-31
Trend Percentages Example
Wheeler, Inc. provides you with the
following operating data and asks that
you prepare a trend analysis.
32. 17-32
Trend Percentages Example
Wheeler, Inc. provides you with the
following operating data and asks that
you prepare a trend analysis.
$1,991 - $1,820 = $171
33. 17-33
Trend Percentages Example
Using 1995 as the base year, we develop
the following percentage relationships.
$1,991 - $1,820 = $171
$171 ÷ $1,820 = 9% rounded
35. 17-35
Ratios
Ratios can be expressed in three
different ways:
1. Ratio (e.g., current ratio of 2:1)
2. % (e.g., profit margin of 2%)
3. $ (e.g., EPS of $2.25)
CAUTION!
“Using ratios and percentages without
considering the underlying causes may
be hazardous to your health!”
lead to incorrect conclusions.”
36. 17-36
Categories of Ratios
Liquidity Ratios
Indicate a company’s short-term
debt-paying ability
Equity (Long-Term Solvency) Ratios
Show relationship between debt and
equity financing in a company
Profitability Tests
Relate income to other variables
Market Tests
Help assess relative merits of stocks in
the marketplace
37. 17-37
10 Ratios You Must Know
Liquidity Ratios
Current (working capital) ratio
Acid-test (quick) ratio
Cash flow liquidity ratio
Accounts receivable turnover
Number of days’ sales in accounts
receivable
Inventory turnover
Total assets turnover
38. 17-38
10 Ratios You Must Know
Equity (Long-Term Solvency) Ratios
Equity (stockholders’ equity) ratio
Equity to debt
39. 17-39
10 Ratios You Must Know
Profitability Tests
Return on operating assets
Net income to net sales (return on
sales or “profit margin”)
margin” $
Return on average common
stockholders’ equity (ROE)
ROE
Cash flow margin
Earnings per share
Times interest earned
Times preferred dividends earned
40. 17-40
10 Ratios You Must Know
Market Tests
Earnings yield on common stock
Price-earnings ratio
Payout ratio on common stock
Dividend yield on common stock
Dividend yield on preferred stock
Cash flow per share of common
stock
41. 17-41
Now, let’s look at
Norton
Corporation’s 1999
and 1998 financial
statements.
45. 17-45
Now, let’s calculate
the 10 ratios based
on Norton’s financial
statements.
46. 17-46
NORTON CORPORATION
1999
Cash $ 30,000
Accounts receivable, net
We will Beginning of year 17,000
use this End of year 20,000
information Inventory
to calculate Beginning of year 10,000
the liquidity
End of year 12,000
ratios for
Total current assets 65,000
Norton.
Total current liabilities 42,000
Sales on account 494,000
Cost of goods sold 140,000
47. 17-47
Working Capital*
The excess of current assets over
current liabilities.
12/31/99
Current assets $ 65,000
Current liabilities (42,000)
Working capital $ 23,000
* While this is not a ratio, it does give an
indication of a company’s liquidity.
48. 17-48
Current (Working Capital) Ratio
#1
Current Current Assets
=
Ratio Current Liabilities
Current $65,000
= = 1.55 : 1
Ratio $42,000
Measures the ability
of the company to pay current
debts as they become due.
49. 17-49
Acid-Test (Quick) Ratio
#2
Acid-Test Quick Assets
=
Ratio Current Liabilities
Quick assets are Cash,
Marketable Securities,
Accounts Receivable (net) and
current Notes Receivable.
50. 17-50
Acid-Test (Quick) Ratio
#2
Acid-Test Quick Assets
=
Ratio Current Liabilities
Norton Corporation’s quick
assets consist of cash of
$30,000 and accounts
receivable of $20,000.
51. 17-51
Acid-Test (Quick) Ratio
#2
Acid-Test Quick Assets
=
Ratio Current Liabilities
Acid-Test $50,000
= = 1.19 : 1
Ratio $42,000
52. 17-52
Accounts Receivable Turnover
Net, credit sales #3 Average, net accounts
receivable
Accounts
Sales on Account
Receivable =
Average Accounts Receivable
Turnover
Accounts
$494,000
Receivable = = 26.70 times
($17,000 + $20,000) ÷ 2
Turnover
This ratio measures how many
times a company converts its
receivables into cash each year.
53. Number of Days’ Sales
17-53
in Accounts Receivable
#4
Days’ Sales
365 Days
in Accounts =
Accounts Receivable Turnover
Receivables
Days’ Sales
365 Days
in Accounts = = 13.67 days
26.70 Times
Receivables
Measures, on average, how many
days it takes to collect an
account receivable.
54. 17-54
Inventory Turnover
#5
Inventory Cost of Goods Sold
=
Turnover Average Inventory
Inventory $140,000
= = 12.73 times
Turnover ($10,000 + $12,000) ÷ 2
Measures the number of times
inventory is sold and
replaced during the year.
55. Equity, or Long–Term
17-55
Solvency Ratios
This is part of the information to
calculate the equity, or long-term
solvency ratios of Norton Corporation.
NORTON CORPORATION
1999
Net operating income $ 84,000
Net sales 494,000
Interest expense 7,300
Total stockholders' equity 234,390
56. 17-56
NORTON CORPORATION
1999
Common shares outstanding
Beginning of year 17,000
End of year 27,400
Net income $ 53,690
Here is the Stockholders' equity
rest of the Beginning of year 180,000
information
we will End of year 234,390
use. Dividends per share 2
Dec. 31 market price/share 20
Interest expense 7,300
Total assets
Beginning of year 300,000
End of year 346,390
57. 17-57
Equity Ratio
#6
Equity Stockholders’ Equity
=
Ratio Total Assets
Equity $234,390
= = 67.7%
Ratio $346,390
Measures the proportion
of total assets provided by
shareholders.
58. 17-58
Net Income to Net Sales
on Sales or Profit Margin
#7
Net Income
Net Income
to =
Net Sales
Net Sales
Net Income
$53,690
to = = 10.9%
$494,000
Net Sales
Measures the proportion of the sales
which is retained as profit.
59. Return on Average Common
17-59
Shareholders’ Equity (ROE)
#8
Return on Net Income
Stockholders’ = Average Common
Equity Stockholders’ Equity
Return on
$53,690
Stockholders’ = = 25.9%
($180,000 + $234,390) ÷ 2
Equity
Important measure of the
income-producing ability
of a company.
60. 17-60
Earnings Per Share
#9
Earnings Available to Common Shareholders
Earnings
= Weighted-Average Number of Common
per Share
Shares Outstanding
Earnings $53,690
= = $2.42
per Share (17,000 + 27,400) ÷ 2
The financial press regularly publishes
actual and forecasted EPS amounts.
61. 17-61
Price-Earnings Ratio
#10
Price-Earnings Market Price Per Share
=
Ratio EPS
Price-Earnings $20.00
= = 8.3 : 1
Ratio $ 2.42
Provides some measure of whether the
stock is under or overpriced.
62. 17-62
Important Considerations
Need for comparable data
Data is provided by Dun &
Bradstreet, Standard & Poor’s etc.
Must compare by industry
Is EPS comparable?
Influence of external factors
General business conditions
Seasonal nature of business operations
Impact of inflation
64. 17-64
Question
The current ratio is a measure of
The current ratio is a measure of
liquidity that is computed by dividing
liquidity that is computed by dividing
total assets by total liabilities.
total assets by total liabilities.
a. True
a. True
b. False
b. False
65. 17-65
Question
The current ratio is a measure of
The current ratio is a measure of
liquidity that is computed by dividing
liquidity that is computed by dividing
total assets by total liabilities.
total assets by total liabilities.
a. True
a. True
b. False
b. False The current ratio is a measure of
The current ratio is a measure of
liquidity, but is computed by
liquidity, but is computed by
dividing current assets by
dividing current assets by
current liabilities
current liabilities
66. 17-66
Question
Quick assets are defined as Cash,
Quick assets are defined as Cash,
Marketable Securities and net
Marketable Securities and net
receivables.
receivables.
a.
a. True
True
b.
b. False
False
67. 17-67
Question
Quick assets are defined as Cash,
Quick assets are defined as Cash,
Marketable Securities and net
Marketable Securities and net
receivables.
receivables.
a.
a. True
True
b.
b. False
False
68. 17-68
Question
Accounting Ratios are important tools
Accounting Ratios are important tools
used by.
used by.
a. Managers
a. Managers c. Investors,
c. Investors,
b. Researchers
b. Researchers d. All of the above
d. All of the above
Ans: d
Ans: d
69. 17-69
Question
Working Capital Turnover measures the
Working Capital Turnover measures the
relationship of Working Capital with.
relationship of Working Capital with.
a. Fixed Assets
a. Fixed Assets
b. Sales
b. Sales
c. Purchase
c. Purchase
d. Stock
d. Stock
Ans; a
Ans; a
70. 17-70
Question
In Current Ratio, Current Assets are
In Current Ratio, Current Assets are
compared with:.
compared with:.
a. Current Profit
a. Current Profit
b. Current Liabilities,
b. Current Liabilities,
c. Fixed Assets,
c. Fixed Assets,
d. Equity Share Capital.
d. Equity Share Capital.
Ans:b
Ans:b
71. 17-71
Question
Ratio of Net Income to Number of Equity
Ratio of Net Income to Number of Equity
Shares known as.
Shares known as.
a. Price Earnings Ratio,
a. Price Earnings Ratio,
b. Net Profit Ratio,
b. Net Profit Ratio,
c. Earnings per Share,
c. Earnings per Share,
d. Dividend per Share.
d. Dividend per Share.
Ans: c
Ans: c
72. 17-72
Question
Gross Profit Ratio for a firm remains
Gross Profit Ratio for a firm remains
same but the Net Profit Ratio is
same but the Net Profit Ratio is
decreasing. The reason for such
decreasing. The reason for such
behavior could be:
behavior could be:
(a)Increase in Costs of Goods Sold,
(a)Increase in Costs of Goods Sold,
(b)If Increase in Expense,
(b)If Increase in Expense,
(c)Increase in Dividend,
(c)Increase in Dividend,
(d)Decrease in Sales.
(d)Decrease in Sales.
Ans: b
Ans: b
73. 17-73
Which of the Question
Which of the following statements is
following statements is
correct?
correct?
(a)A Higher Receivable Turnover is not
(a)A Higher Receivable Turnover is not
desirable,
desirable,
(b)Interest Coverage Ratio depends upon
(b)Interest Coverage Ratio depends upon
Tax Rate,
Tax Rate,
(c) Increase in Net Profit Ratio means
(c) Increase in Net Profit Ratio means
increase in Sales,
increase in Sales,
(d) Lower Debt-Equity Ratio means
(d) Lower Debt-Equity Ratio means
lower Financial Risk.
lower Financial Risk.
Ans:d
Ans:d
74. 17-74
Question
Which of the following helps analysing
Which of the following helps analysing
return to equity Shareholders?
return to equity Shareholders?
(a) Return on Assets,
(a) Return on Assets,
(b) Earnings Per Share,
(b) Earnings Per Share,
(c) Net Profit Ratio,
(c) Net Profit Ratio,
(d)Return on Investment.
(d)Return on Investment.
Ans: b
Ans: b
75. 17-75
Question
Trend Analysis helps comparing
Trend Analysis helps comparing
performance of a firm
performance of a firm
(a)With other firms,
(a)With other firms,
(b)Over a period of firm,
(b)Over a period of firm,
(c)With other industries,
(c)With other industries,
(d) None of the above
(d) None of the above
Ans: b
Ans: b
76. 17-76
Question
Ratio Analysis can be used to study
Ratio Analysis can be used to study
liquidity, turnover, profitability, etc. of a
liquidity, turnover, profitability, etc. of a
firm. What does Debt-Equity Ratio help
firm. What does Debt-Equity Ratio help
to study?
to study?
(a)Solvency,
(a)Solvency,
(b)Liquidity,
(b)Liquidity,
(c)Profitability,
(c)Profitability,
(d) Turnover,
(d) Turnover,
Ans: a
Ans: a
77. 17-77
Question
In Inventory Turnover calculation, what
In Inventory Turnover calculation, what
is taken in the numerator?
is taken in the numerator?
(a) Sales,
(a) Sales,
(b)Cost of Goods Sold,
(b)Cost of Goods Sold,
(c)Opening Stock,
(c)Opening Stock,
(d) Closing Stock.
(d) Closing Stock.
Ans: b
Ans: b