Lecture_3_ - 2-1Lecture#3Ratio Analysis (continue)Financial...

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Unformatted text preview: 2-1Lecture#3Ratio Analysis (continue)Financial Planning ModelsEFN2-2Financial Ratio AnalysisRatios allow for better comparison through time or between companies.As we look at each ratio, ask yourself:What is the ratio trying to measure What does the value indicate?How can we improve the companys ratio?2-3Categories of Financial RatiosShort-term solvency or liquidity ratiosLong-term solvency or financial leverage ratiosAsset management or turnover ratiosProfitability ratiosMarket value ratios2-4Tsy Co., Inc. Balance Sheetas of December 31 ($ in thousands)Assets20092010Current assetsCash$ 45$ 50Accounts receivable260310Inventory320385Total$ 625$ 745Fixed assetsNet plant and equipment9851100Total assets$1610$18452-5Tsy Co., Inc. Balance Sheet (concluded)Liabilities and equity20092010Current liabilitiesAccounts payable$ 210$ 260Notes payable110175Total$ 320$ 435Long-term debt205225Stockholders equityCommon stock and paid-in surplus290300Retained earnings795885Total$1085$1185Total liabilities and equity$1610$18452-6Tsy Co. Income StatementNet salesCost of goods soldDepreciationEarnings before interest and taxes (EBIT)InterestTaxable incomeTaxesNet incomeDividends Addition to retained earnings2009 2010$620 $710.00 420 480.0025 30.00175 $200.0010 20.00165 180.0049.5 53.45115.5 $126.5540 36.5575.5 $90.002-7Tsy Co. Price per SharePrice Per Share# Shares2009 2010$20 $17100,000 140,0002-8...
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Lecture_3_ - 2-1Lecture#3Ratio Analysis (continue)Financial...

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