investment tools financial statement analysis financial ra

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1、八InvestmentTools:FinancialStatementAnalysis:FinancialRatiosandEarningsperShare1:AnalysisofFinancialStatementsa:Calculate,interpret,anddiscusstheusesofmeasuresofacompany'sinternalliquidity,operatingperformance,riskprofile,growthpotential,andexternalliquidity.Measuresofacompany’sinternalliquidityT

2、heseratiosarethe:1.Currentratio=currentassets/currentliabilities.2.Quickratio=[cash+marketablesecurities+receivable]/currentliabilities.3.Cashratio=[cash+marketablesecurities]/currentliabilities.Thecurrent,quick,andcashratiosdifferonlyintheliquidityofthecurrentassetsthattheanalystprojectswillbeu

3、sedtopayoffthecurrentliabilities.Otherratiosask:1.Doesthecompanycollectitsreceivablesonatimelybasis?a.Receivablesturnover=sales/averagereceivablesb.Averagereceivablescollectionperiod=365/receivablesturnover2.Howfastdoesthecompanymoveitsinventorythroughthesystem?a.Inventoryturnover=costofgoodssol

4、d/averageinventoryb.Averageinventoryprocessingperiod=365/inventoryturnover3.Doesthecompanypayitscurrentbills?a.Payablesturnover=costofgoodssold/averageaccountspayableb.Averagepaymentperiod=365/payablesturnoverThecashcycleisthetimeperiodthatexistsfromwhenthefirmpaysoutmoneyforthepurchaseofrawmate

5、rialstowhenitgetsthemoneybackfromthepurchasersofthefirm’sfinishedgoods.Cashconversioncycle=collectionperiod+inventoryperiod-paymentperiod.Example:Receivablesturnover=9,daysreceivablesout(collectionperiod)=41days,inventoryturnover=6,daysinventoryinstock(inventoryperiod)=61days,payablesturnover=11

6、,anddayspayablesout(paymentperiod)=33days.Cashconversioncycle=41days+61days-33days=69days.Measuresofacompany’soperatingperformanceOperatingefficiencyratiosquestionhowefficientlymanagementisusingtheassetstheyhaveattheirdisposal.Efficiencyratiosareallsalestobalancesheetitemratios.·totalassetturnov

7、er=sales/totalassets·fixedassetturnover=sales/fixedassets·equityturnover=sales/equityOperatingprofitabilityratioslookathowgoodmanagementisatturningtheireffortsintoprofits.Grossprofitmargin=grossprofits/sales.Operatingprofitm