Mgmt_200_Spring_2008_Chap_14_Ratio_Analysis(4,15)

Mgmt_200_Spring_2008_Chap_14_Ratio_Analysis(4,15) -...

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Financial Statement Analysis Purpose Firms strategic decisions as reflected in the financial statements Industry variations Benchmarks Common size financial statements
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Benchmarks Trend analysis Comparing numbers/ratios for a given firm through time Cross-sectional analysis Comparing numbers/ratios across a set of firms at a given point in time Forecast results (expectations) Pre-set numbers (Rules of thumb)
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Common-size Financial Statements Income Statement Set net sales to 100% and recast all the numbers for a given income statement as a percentage of net sales Balance Sheet Set total assets to 100% and recast all the numbers for a given balance sheet as a percentage of total assets Statement of Cash Flows Not applicable
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E14-4: Using Financial Information to Identify Mystery Companies The selected financial data on the following page pertain to four unidentified companies:
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