2015-11-1_FRA_Financial_Ratios_and_Analysis_John_Gillingham_2015_all_rights_reserved.pdf

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1 Financial Ratios & Analysis - Accounting Play
2 Financial Ratios & Analysis - Accounting Play Financial Ratios & Analysis Accounting Play
3 Financial Ratios & Analysis - Accounting Play Table of Content Copyright and Legal ....................................................................................................................................... 7 Using Financial Ratios & Analysis ................................................................................................................... 8 Audio ......................................................................................................................................................... 8 Topics ........................................................................................................................................................ 8 Using Financial Ratios & Analysis ............................................................................................................... 8 About ............................................................................................................................................................. 9 Financial Ratios in Concept ............................................................................................................................ 9 Audio ......................................................................................................................................................... 9 Topics ........................................................................................................................................................ 9 Stakeholders .............................................................................................................................................. 9 Analysis .................................................................................................................................................... 10 Decision Making ...................................................................................................................................... 12 Why Use Financial Ratios ............................................................................................................................ 14 Audio ....................................................................................................................................................... 14 Topics ...................................................................................................................................................... 14 Initial Assessments .................................................................................................................................. 14 Entity Size ................................................................................................................................................ 16 Benefits and Limitations .............................................................................................................................. 18 Audio ....................................................................................................................................................... 18 Topics ...................................................................................................................................................... 18 Benefits ................................................................................................................................................... 18 Limitations ............................................................................................................................................... 19 Balance Sheet .......................................................................................................................................... 21 Income Statement ................................................................................................................................... 23 Industry Specific ...................................................................................................................................... 23 Users ........................................................................................................................................................... 24 Audio ....................................................................................................................................................... 24 Topics ...................................................................................................................................................... 24 Users of Financial Ratios .......................................................................................................................... 24 The Analyst .............................................................................................................................................. 25
4 Financial Ratios & Analysis - Accounting Play Standard Financial Ratios by Category ........................................................................................................ 26 Audio ....................................................................................................................................................... 26 Topics ...................................................................................................................................................... 26 Introduction ............................................................................................................................................ 26 Liquidity ................................................................................................................................................... 26 Profitability .............................................................................................................................................. 26 Debt or Solvency ..................................................................................................................................... 27 Operating Performance ........................................................................................................................... 27 Cash Flow ................................................................................................................................................ 27 Valuation ................................................................................................................................................. 27 Industry Specific ...................................................................................................................................... 27 Summary ................................................................................................................................................. 27 Liquidity Ratios ............................................................................................................................................ 28 Audio ....................................................................................................................................................... 28 Topics ...................................................................................................................................................... 28 Introduction ............................................................................................................................................ 28 Current Ratio ........................................................................................................................................... 28 Quick Ratio .............................................................................................................................................. 30 Cash Ratio ................................................................................................................................................ 31 Times Interest Earned Ratio .................................................................................................................... 32 Profitability Ratios ....................................................................................................................................... 33 Audio ....................................................................................................................................................... 33 Topics ...................................................................................................................................................... 33 Introduction ............................................................................................................................................ 33 Profit Margin ........................................................................................................................................... 33 Gross Margin ........................................................................................................................................... 35 Effective Tax Rate .................................................................................................................................... 36 Return on Assets ..................................................................................................................................... 37 Return on Equity ...................................................................................................................................... 38 DuPont Formula ...................................................................................................................................... 39 Return on Capital Employed .................................................................................................................... 40 Debt and Solvency Ratios ............................................................................................................................ 41 Audio ....................................................................................................................................................... 41 Topics ...................................................................................................................................................... 41
5 Financial Ratios & Analysis - Accounting Play Introduction ............................................................................................................................................ 42 Debt Ratio ............................................................................................................................................... 42 Debt to Equity Ratio ................................................................................................................................ 43 Equity Ratio ............................................................................................................................................. 44 Capitalization Ratio .................................................................................................................................. 45 Cash Flow to Debt ................................................................................................................................... 46 Operating Performance Ratios .................................................................................................................... 48 Audio ....................................................................................................................................................... 48 Topics ...................................................................................................................................................... 48 Summary ................................................................................................................................................. 48 Fixed Assets Turnover Ratio .................................................................................................................... 49 Sales or Revenue per Employee .............................................................................................................. 50 Operating Cycle ....................................................................................................................................... 51 Cash Conversion Cycle ............................................................................................................................. 52 Account Receivable Turnover Ratio ........................................................................................................ 53 Accounts Payable Turnover Ratio ............................................................................................................ 54 Inventory Turnover Ratio ........................................................................................................................ 55 Cash Flow Ratios .......................................................................................................................................... 56 Audio ....................................................................................................................................................... 56 Topics ...................................................................................................................................................... 56 Summary ................................................................................................................................................. 56 Operating Cash Flow / Sales Ratio ........................................................................................................... 57 Free Cash-Flow / Operating Cash Ratio ................................................................................................... 58 Cashflow Coverage Ratio ......................................................................................................................... 59 Valuation Ratios .......................................................................................................................................... 60 Audio ....................................................................................................................................................... 60 Topics ...................................................................................................................................................... 60 Summary ................................................................................................................................................. 60 Price/Book Value Ratio ............................................................................................................................ 60 Earnings per Share .................................................................................................................................. 62 Price to Earnings per Share ..................................................................................................................... 63 Price/Earnings to Growth Ratio ............................................................................................................... 64 Price/Sales Ratio ...................................................................................................................................... 65 Dividend Yield Ratio ................................................................................................................................. 66
6 Financial Ratios & Analysis - Accounting Play Dividend Payout Ratio ............................................................................................................................. 67 Enterprise Market Value ......................................................................................................................... 68 Financial Ratios in Closing ........................................................................................................................... 69 Audio ....................................................................................................................................................... 69 Topics ...................................................................................................................................................... 69 Summary ................................................................................................................................................. 69 Example Financial Statements ..................................................................................................................... 70 Balance Sheet .......................................................................................................................................... 70 Income Statement ................................................................................................................................... 71 Statement of Shareholders’ Equity .......................................................................................................... 72 Statement of Cash Flows ......................................................................................................................... 73 Accounting Glossary .................................................................................................................................... 74
7 Financial Ratios & Analysis - Accounting Play Copyright and Legal 2015 John Gillingham, All Rights Reserved.
8 Financial Ratios & Analysis - Accounting Play Using Financial Ratios & Analysis Audio Using Financial Ratios & Analysis Topics Using Financial Ratios & Analysis Using Financial Ratios & Analysis Financial Ratios & Analysis is a book based upon the App, Financial Ratio Flashcards. Both the book and app covers the most important financial ratios using both flashcards along with written and audio lessons that cover ratio analysis, calculation, and key points. Audio within the text links to streaming

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