{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Ratio Analysis (Part I)

Ratio Analysis (Part I) - Supplement Materials for...

This preview shows pages 1–3. Sign up to view the full content.

2011/4/6 Yu-cheng Chen, NCHU Supplement Materials for Financial Statement Analysis Course Statement Analysis Course FOUNDATIONS OF RATIO AND FINANCIAL ANALYSIS Part I FOUNDATIONS OF FOUNDATIONS OF RATIO AND FINANCIAL ANALYSIS FINANCIAL ANALYSIS Part I Part I 2011/4/6 Yu-cheng Chen, NCHU INTRODUCTION INTRODUCTION Purpose and Use of Ratio Analysis Ratio Analysis : Cautionary Notes Economic Assumptions Benchmarks Timing and Window Dressing Negative Numbers Accounting Methods 2011/4/6 Yu-cheng Chen, NCHU Ratio Analysis A primary advantage of ratios is that A primary advantage of ratios is that they can be used to compare the risk and return relationships of firms of and return relationships of firms of different sizes. different sizes. 2011/4/6 Yu-cheng Chen, NCHU Cautionary Notes Negative Numbers Example 1: Return on Equity=Income/Equity Income Equity ROE Company A \$50,000 \$500,000 10% Company B -50,000 -500,000 10%

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
2011/4/6 Yu-cheng Chen, NCHU Cautionary Notes Negative Numbers Example 2: Dividend Payout Ratio=Dividend/Income Dividend Income Payout Ratio Company A \$20,000 \$100,000 20% Company B 20,000 80,000 25% Company C 20,000 -100,000 -20% 2011/4/6 Yu-cheng Chen, NCHU COMMON-SIZE STATEMENTS COMMON COMMON- SIZE SIZE STATEMENTS 2011/4/6 Yu-cheng Chen, NCHU Comparative Balance Sheet and Income Statements(1999 data) A. Comparative Balance Sheets As Reported Common Size(％) ─────────────────────────────────────────────────────────────────── Pfizer Takeda Roche (Millions of \$) (Millions of Yen) (Millions of CHF) Pfizer Takeda Roche ────────────────────────────────────────────────────────────────────── Cash and cash equivalents \$ 739 313,798 \$16,544 4 24 23 Short-term investments and loans 3,967 227,032 2,322 19 17 3 Accounts receivable 3,864 224,878 6,178 19 17 9 Inventories 1,654 107,767 6,546 8 8 9 Prepaid expenses and taxes 958 39,788 3,041 5 3 4 Current assets \$11,191 913,263 \$34,631 54％ 69％ 49％ Long-term investments 1,721 123,822 2,271 8 9 3 Net property land and equipment 5,343 224,229 14,240 26 17 20 Net goodwill and other intangible assets 763 15,672 4 0 22 Other assets 1,556 65,685 3,617 8 5 5 Total assets 20,574 1,326,999 \$70,431 100％ 100％ 100％ 2011/4/6 Yu-cheng Chen, NCHU Comparative Balance Sheet and Income Statements(1999 data) (continued) A. Comparative Balance Sheets As Reported Common Size(％) ────────────────────────────────────────────────────────────────────────────── Pfizer Takeda Roche (Millions of \$) (Millions of Yen) (Millions of CHF) Pfizer Takeda Roche ─────────────────────────────────────────────────────────────────── Short-term debt 5,001 11,480 5,072 24 1 8 Accounts and notes payable 951 113,034 2,378 5 9 3 Income taxes payable 869 38,698 728 4 3 1 Other current liabilities 2,364
This is the end of the preview. Sign up to access the rest of the document.