Financial Analysis
Financial Analysis
Financial Analysis
Fichier Détails
| Cartes-fiches | 288 |
|---|---|
| Langue | English |
| Catégorie | Finances |
| Niveau | Université |
| Crée / Actualisé | 06.01.2017 / 10.03.2017 |
| Lien de web |
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Compute basic and dilutive EPS
- Net income USD 11.560
- 1500 common shares outstanding at the beginning of the year and 2.500 common shares at year-end
- 1.000 preferred shares par USD 100 at 10%
- 60 bond par USD 1.000 at 8%
- Each bond is convertible to 100 shares common stock
- Tax rate is 40%
EPS must be recalculated for which of the following events
Calculate the deferred tax liability for a firm purchasing a machine each year for USD 6000 using SL-depreciation over two years on its tax returns and three years in its financial statements. Assume a tax rate of 40%
A tax liability which is not expected to reverse is best interpreted as
The reported effective tax rate
formular
s_eff = ( Income tax expense) / (Pretax income)
For its own use YourCo leases a machine with four annual payments of USD 10k. At the end of the lease,
the lessor regains possession of the asset which will be
sold for scrap value. The discount rate on the lease is 10%.
a) How is the lease classified?
b) Calculate the impact of the lease on balance sheet and income statement. All assets are depreciated on SL basis.
a) The arrangement is classified capital lease as the time exceeds 75 % of useful life
b) NPV = $ 31700
DR_SL = $ 7925
Comment on the following trends after a new management was brought in
a) Revenue +19%
b) Inventory +58%
c) Receivables +38%
Inventory and receivables should grow at a slower or similar rate as revenues.This might indicate lower credit standards or aggressive accounting policies.
Interpret the following financials
The healthy income trend is countervailed by declining profitability. Is this decline persistend.
Interpret the following asset composition
Fixed assets and Investment remain constant but decrease relatively. Inventory and receivables increase and account for the increasing asset balance.Cash decreases absolutely. The company might run out of liquidity.
Activity Ratios
- Inventory turnover
- DOH (days of inventory on hand)
- Receivable turnover
- DSO (days of sales outstanding)
- Payables turnover
- number of days of payables
Inventory turnover =
= CoGS / avrg. Inventory
DOH (days of inventory on hand) =
= 365 / Inventory TO
Receivable turnover =
= Net Sales / avrg Receivables
DSO (days of sales outstanding) =
= 365 / Receivables TO
Payables turnover =
= CoGS / avrg trade payables
number of days of payables =
= 365 / payables TO
Working capital turnover =
= Net Sales / Avg. working capital
Fixed asset turnover =
= Net Sales / Avg. net fixed assets
Total asset turnover =
= Net sales / Avg.total assets
Liquidity Ratios
- Current ratio
- Quick ratio
- Cash ratio
- Defensive interval ratio
- Cash conversion cycle
Current ratio =
= Current assets / Current liabilities
Quick ratio
= ( Cash +Marketable securities + Receivables ) / Current liabilities
Cash ratio =
= (Cash +Marketable securities) / Current liabilities
Defensive interval ratio =
= (Cash +Marketable securities + Receivables) / Daily cash expenditures
Cash conversion cycle =
= DOH + DSO - Number of days payables
Solvency Ratios – Debt Ratios
- Debt-to-asset
- Debt-to-capital
- Debt-to-equity
- Financial leverage
Debt-to-asset ratio =
= Total debt / Total Assets
Debt-to-capital ratio =
= Total debt / (Total debt + Equity)
Debt-to-equity ratio =
= Total Debt / Shareholders Equity
Financial leverage ratio =
= Avg.total assets / Avg.total Equity
Solvency Ratios – Coverage Ratios
- Interest coverage
- Fixed charge coverage
Fixed charge coverage =
= (EBIT + lease payments) / (Interest + lease payments)
Interest coverage =
= EBIT / Interest Payments
Profitability Ratios – Return on Sales
- Gross profit margin
- Operating profit margin
- Pretax margin (earnings before tax)
- Net profit margin (net income)
Gross profit margin =
= Gross profit / Revenue
Operating profit margin =
= Operating income / revenue
Pretax margin =
= EBT / Revenue
Net profit margin =
= NI / Revenue
Profitability Ratios – Return on Investment
- Return on assets
- Operating ROA
- Return on total capital
- Return on Equity
Return on assets =
= NI / avrg total assets
