Ch.17_Financial Ratios

Ch.17_Financial Ratios - CHAPTER 17 Analyzing Financial...

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1 CHAPTER 17 Analyzing Financial Performance Purpose of performance analysis Financial statement analysis Ratio analysis Du Pont analysis
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2 Learning Objectives Analyze business activity with accounting concepts and principles and make recommendations based on analysis Calculate and interpret ratios discussed in class Use ratios to characterize a business’s financial condition and position
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3 Financial performance analysis assesses a business’s financial condition: Does it have the financial capacity to meet its mission? Results sometimes focus on financial strengths and weaknesses Overview
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4 Users of financial statement analysis Analysts Creditors- banks Bond rating agencies- big co’s that issue bonds (w/a rating about how risky investment is) Investors – need to benchmark against competitors Managers Trustees, Directors Overview
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5 Several techniques Financial statement analysis Assess financial performance and condition Operating indicator analysis Explain financial performance and condition Overview
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6 Business making money on operations? Major sources of cash Major uses of cash Statement of Cash Flows Analysis
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7 Technique combining values from the financial statements to create single numbers that: Have easily interpretable economic significance Facilitate comparisons Internal and external users Ratio Analysis
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This note was uploaded on 02/24/2010 for the course HPM 340 taught by Professor Reiter during the Spring '10 term at UNC.

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Ch.17_Financial Ratios - CHAPTER 17 Analyzing Financial...

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