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Financial Ratios and Analysis Techniques

The document defines and explains various types of financial analysis used to evaluate companies including vertical analysis, horizontal analysis, leverage analysis, growth rates, profitability ratios, liquidity ratios, efficiency ratios, and cash flow analysis.

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Kry Neo
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8 views1 page

Financial Ratios and Analysis Techniques

The document defines and explains various types of financial analysis used to evaluate companies including vertical analysis, horizontal analysis, leverage analysis, growth rates, profitability ratios, liquidity ratios, efficiency ratios, and cash flow analysis.

Uploaded by

Kry Neo
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

VERTICAL ANALYSIS

COMPONENT/ TOTAL = PERCENTAGE

HORIZONTAL ANALYSIS

CURRENT YEAR – BASE YEAR / BASE YEAR = CHANGES (%)

LEVERAGE ANALYSIS

DEBT/EQUITY = TOTAL DEBT/ TOTAL SHAREHOLDRS EQUITY, < 0.4 RECOMMENDED

DEBT/EBITDA = NET DEBT/ EARNINGS BEFORE INTEREST + TAX + DEPRECIATION + AMORTIZATION, LOW=NOT EXCESSSIVELY IN DEBT

EBIT/INTEREST COVERAGE = EBIT / INTEREST EXPENSE , HIGHER= STRONGER FINANCIAL HEALTH

DUPONT = DI KO GETS HEHEHEMAY ROE(PART TO ATTA NG RISK) NA PART IH

GROWTH RATES – WALANG INTERPRETATIONS SA SITE

YEAR TO YEAR = CURRENT YEAR- BASE YEAR/ BASE YEAR, SAME LANG SA HORIZOTAL

REGRESSION ANALYSIS = Y(DEPENDENT) = a(INTEREST) + b(SLOPE) X (INDEPENDENT) + E(ERROR)

STRAIGHT LINE = SAME SA YTOY PERO ASSUME CONSTANT YUNG PERCENTAGE OF CHANGE

MOVING AVERAGE = DI KO RIN GETS PERO YUNG PAGKUHA NG PERCENTAGE PER YEAR SAME SA YTOY, SAKA IAAVERAGE

PROFITABILITY AVERAGE- LAHAT RECOMMENDED NA HIGHER, KASI THIS INDICATES THE ABILITY TO GENERATE PROFIT

GROSS MARGIN= REVENUE-COGS/ REVENUE

EBITDA MARGIN = EARNINGS BEFORE INTEREST + TAX + DEPRECIATION + AMORTIZATION/ NET SALES

EBIT MARGIN = EBIT/ TOTAL REEVNUE, EBIT= NET INCOME+ INTEREST + TAX

NET PROFIT MARGIN = NET PROFIT/ REVENUE

LIQUIDITY ANALYSIS – THE HIGHER THE BETTER ULIT

CURRENT RATIO = CURRENT ASSETS/ CURRENT LIABILITIES

ACID TEST = CURRENT ASSET – INVENTORY/ CURRENT LIABILITY

CASH RATIO = CASH AND CASH EQUIVALENT / CURRENT LIABILITIES

NET WORKING CAPITAL = CURRENT ASSET-CURRENT LIABILITIES AND ESXPENSE/ TOTAL ASSETS

EFFICIENCY ANALYSIS – HIGH ULIT RECOMMENDED, ISIPIN MO NA LANG KUNG BAKIT

ASSET TURNOVER RATIO = NET SALES/ AVERAGE TOTAL ASSET

FIXED ASSET TURNOVER RATIO = NET SALES/ AVERAGE FIXED ASSET

CASH CONVERSION RATIO = PART NG CASH FLOW/ NET INCOME

INVENTORY TURNOVER RATIO = COGS/ AVERAGE INVENTORY

CASH FLOW

OPERATING CASH FLOW (OCF)

FREE CASH FLOW (FCF) =

FREE CASH FLOW TO THE FIRM (FCFF) = NET OPERATING CASHFLOW + DEPRE AND AMORTIZATION – CAPITAL EXPENDITURE – NET CHANGES IN WORKING CAPITAL

FREE CASH FLOW TO EQUITY (FCFE) = CASH FORM OPERTING ACTIVITIES – CAPITAL EXPENDITURES + NET DEBT ISSUED (REPAID)

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