350-03a_note[1]

350-03a_note[1] - 350-03a_note, 11S TOPIC 3: ANALYSIS OF...

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350-03a_note, 11S Page 1 of 10 TOPIC 3: ANALYSIS OF FINANCIAL STATEMENTS (CHAPTER 4) I. Outline A. Ratio Analysis 1. Liquidity 2. Asset management 3. Debt management 4. Profitability 5. Market value 6. Du Pont system B. Effects of improving ratios C. Limitations of ratio analysis D. Qualitative factors II. Homework Assignment Chapter 4 Question 1-3, 5, 6, 8 Problem 1, 3, 4, 7, 11, 15, 18-19 ================================================================ Class Notes I. Financial Statements A. Balance Sheet: 1. Statement 2009E 2008 2007 Assets Cash 85,632 7,282 57,600 AR 878,000 632,160 351,200 Inventories 1,716,480 1,287,360 715,200 Total CA 2,680,112 1,926,802 1,124,000 Gross FA 1,197,160 1,202,950 491,200 Less: Acc. Dep 380,120 263,160 146,200 Net FA 817,040 939,790 344,800 Total Assets 3,497,152 2,866,592 1468,800 Liabilities and Equity AP 436,800 524,160 145,600 Notes Payable 300,000 636,808 200,000 Accruals 408,000 489,600 136,000 Total CL 1,144,800 1,650,568 481,600 LT debt 400,000 723,432 323,432 Total Liability 1,544,800 2,374,000 805,032 Common Stock 1,721,176 460,000 460,000 Retained earnings RE 231,176 32,592 203,768 Total Equity 1,952,352 492,592 663,768 Total L+E 3,497,152 2,866,592 1468,800
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Page 2 of 10 B. Income Statement 2009E 2008 2007 Sales 7,035,600 6,034,000 3,432,000 COGS 5,875,992 5,528,000 2,864,000 Other Expenses 550,000 519,988 358,672 EBITDA 609,680 (13,988) 209,328 Depreciation & Amortization 116,960 116,960 18,900 EBIT 492,648 (130,948) 190,428 Interest Expense 70,008 136,012 43,828 EBT (Gross Income) 422,640 (266,960) 146,600 Taxes 169,056 (106,784) 58,640 Net Income 253,584 (160,176) 87,960 EPS 1.014 (1.602) 0.880 DPS 0.220 0.110 0.220 BV / Share 7.809 4.926 6.638 Stock Prices 12.17 2.25 8.5 Shares outstanding 250,000 100,000 100,000 Tax rate 40% 40% 40% Lease payments 40,000 40,000 40,000 Sinking fund payments 0 0 0 II. Ratio Analysis A. Introduction (Case A) 1. Why are Ratios Useful? a) Ratios standardize numbers and facilitate comparisons. b) Ratios are used to highlight weaknesses and strengths. c) Ratio comparisons should be made through time and with competitors d) Trend analysis e) Peer (or Industry) analysis 2. What are the five major categories of ratios, and what questions do they answer? a) Liquidity: Can we make required payments? b) Asset management: right amount of assets vs. sales? c) Debt management: Right mix of debt and equity? d) Profitability: Do sales prices exceed unit costs, and are sales high enough as reflected in PM, ROE, and ROA? e)
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This note was uploaded on 09/30/2011 for the course FIN 350 taught by Professor Chen during the Spring '07 term at S.F. State.

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350-03a_note[1] - 350-03a_note, 11S TOPIC 3: ANALYSIS OF...

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