tailieunhanh - Lecture Contemporary financial management (9th Edition): Chapter 3 - Moyer, McGuigan, Kretlow

Chapter 3 - Evaluation of financial performance. This chapter introduces financial statement analysis techniques that are used to accurately evaluate a company’s performance. | 3 Evaluation of Financial Performance Introduction This chapter introduces financial statement analysis techniques that are used to accurately evaluate a company’s performance. Financial Ratios Are Used By Management for planning and evaluating Credit managers to estimate the riskiness of potential borrowers Investors to evaluate corporate securities Managers to identify and assess potential merger candidates Ratio Classifications Liquidity Asset management Financial leverage management Profitability Market-based Dividend policy Major Financial Statements Balance sheet Common-sized balance sheet shows assets, liabilities, and equity as a percent of total assets. Income statement Common-sized income statement shows income and expense items as a percent of net sales. Statement of cash flows Liquidity Ratios Current ratio = Quick ratio = Quick ratio, sometimes called the “acid test,” is a more stringent measure of liquidity than the current ratio. Liquidity ratios are quick measures of a firm’s ability to provide sufficient cash to conduct business over the next few months. Current assets Current liabilities Current assets – Inventories Current liabilities Asset Management Ratios Avg. collection period = Inventory turnover = Fixed-asset turnover = Total asset turnover = Cost of sales Average inventory Sales Net fixed assets Sales Total assets Accounts receivable Annual credit sales/365 Asset Management Ratios Asset management ratios indicate how much a firm has invested in a particular type of asset (or group of assets) relative to the revenue the asset is producing. By comparing asset management ratios for the various asset accounts of a firm with established industry norms, the analyst can determine how efficiently the firm is allocating its resources. Financial Leverage Management Debt ratio = Debt-to-equity ratio = Times interest earned = Fixed charge coverage = Total debt Total assets Total debt Total equity EBIT Interest charges EBIT + Lease pmts Interest | 3 Evaluation of Financial Performance Introduction This chapter introduces financial statement analysis techniques that are used to accurately evaluate a company’s performance. Financial Ratios Are Used By Management for planning and evaluating Credit managers to estimate the riskiness of potential borrowers Investors to evaluate corporate securities Managers to identify and assess potential merger candidates Ratio Classifications Liquidity Asset management Financial leverage management Profitability Market-based Dividend policy Major Financial Statements Balance sheet Common-sized balance sheet shows assets, liabilities, and equity as a percent of total assets. Income statement Common-sized income statement shows income and expense items as a percent of net sales. Statement of cash flows Liquidity Ratios Current ratio = Quick ratio = Quick ratio, sometimes called the “acid test,” is a more stringent measure of liquidity than the current ratio. Liquidity ratios are quick measures of a

• Quản trị kinh doanh
• Financial mnagement
• Contemporary financial management
• Quản lý tài chính
• Quản lý tài chính hiện đại
• Lecture Contemporary financial management
• Financial performance
• International financial marketplace
• Business organizations
• Time value of money
• Analysis of risk
• Long term debt
• Preferred stock
• Common stock
• Capital budgeting
• Cost of capital
• Capital structure
• Capital structure management
• Dividend policy
• Financing with derivatives