投资学全英文ppt8.ppt

Key Financial Ratios Study of the relationships between financial statement accounts Purpose is to develop information about the past that can be used to get a handle on the future “X-rays” of the financial statements to look for meaningful relationships between numbers Looks at company’s historical trends to see if improving or declining Looks at industry standards to see how company compares to competitors Major Groups of Financial Ratios Liquidity Ratios: the company’s ability to meet day-to-day operating expenses and satisfy short-term obligations as they become due Activity Ratios: how well the company is managing its assets Leverage Ratios: amount of debt used by the company Profitability Ratios: measures how successful the company is at creating profits Common Stock Ratios: converts key financial information into per-share basis to simplify financial analysis Liquidity Ratios Current Ratio: how many dollars of short-term assets are available for every dollar of short-term liabilities owed Higher ratio: more liquidity Lower ratio: less liquidity Liquidity Ratios (contd) Net Working Capital: how many dollars of working capital are available to pay bills and grow the business Higher amounts: firm makes large investments in working capital Lower amounts: firms operates with less working capital Activity Ratios Accounts Receivable Turnover: how quickly the company is collecting its accounts receivable (sales to customers on credit) Higher ratio: better Lower ratio: worse Activity Ratios (cont’d) Inventory Turnover: how quickly the company is selling its inventory Higher ratio: better Lower ratio: worse Activity Ratios (contd) Total Asset Turnover: how efficiently the company is using its assets to support sales Higher ratio: better Lower ratio: worse Leverage Ratios Debt-Equity Ratio: how much debt the company is using to support its business compared to how much stockholders’ equity it is using to support its business Higher ratio: more risk Lower ratio: less