Fin Stat Analysis - 1/17/2011 1 FI NANCE 1 01 MAMUNUR R...

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Unformatted text preview: 1/17/2011 1 FI NANCE 1 01 MAMUNUR R ASHI D Financial Statement Analysis 1 Chapter Objectives 2 c To discuss briefly about different financial statements. c To analyze the financial statements using different techniques like ratio analysis, common size statement, DuPont Method. c To learn how to write a report on financial statement analysis. 1/17/2011 2 Financial Statements 3 c Financial statements are end result of company performance. c Types of financial statements: r Balance Sheet r Income Statement r Cash flow Statement r Owners Equity Statement r Value Added Statement Balance Sheet 4 c Balance Sheet is a financial statement that represents Assets, Liability and Owners Equity; where Asset items must be balanced with Liability +Owners Equity items. ABC Company Balance Sheet As on 31 st December, 2005 (Figures in Million Taka) Assets Liability + Owners Equity Cash + Marketable Securities 100 Short term loan 50 Inventory 220 Accounts payable 50 Accounts Receivables 180 Long term bank loan 150 Total Current Assets 500 Total liabilities 250 Fixed Assets 100 Total equity 350 Total Assets 600 Total Share Holders + Equity 600 1/17/2011 3 Income Statement 5 c Income Statement is a financial statement that represents income, expenses and net profit or loss for a certain period of time. ABC Company Income Statement For the year ended on 31 st Dec, 2005 (Figures in Million Taka) Sales 1000 Less: Cost of Goods Sold (COGS) 800 Gross Profit 200 Less: Operating Expenses 120 Earnings before Interest and Taxes 80 Less: Interest 20 Less: Tax 30 Net Income 30 Cash Flow Statement 6 c Cash flow statement is a financial statement that represent the cash inflow, cash outflow and net cash flow for a certain period of time. c Calculation steps: r Prepare the sources and uses statement r Allocate the source and uses items into Operating, Financial and Investing activities. c Rules for Sources and Uses: r Increase in asset items will decrease cash and vice versa. r Increase in liability items will increase cash and vice versa. r Depreciation is always a source of cash. r Net income is source but net loss is use of cash. c Cash Flow Statement: Allocating sources and uses into r Operating activities: Short term asset and liabilities, and income statement items. r Investing activities: Long run investment in fixed asset and financial assets. r Financing activities: Long run collection of fund and related activities. 1/17/2011 4 Example of Cash flow Statement 7 SOURCE AND USE STATEMENT 31/12/04 31/12/05 Source Use Cash and marketable securities 40 15 25 Accounts receivables 160 180 20 Inventory 200 270 70 Gross plant and equipment 600 680 80 Accounts payable 15 30 15 Accruals 55 60 5 Notes payable 35 40 5 Long-term bonds 255 300 45 Common stock (25 M shares) 130 130 Net income 54 Add: Depreciation 50 Gross cash flow from operations 104 104 Dividend payment 29 29 Totals 199 199 Cash Flow Statement For the year ended on Dec 31, 2005 Cash flows from operating activities...
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Fin Stat Analysis - 1/17/2011 1 FI NANCE 1 01 MAMUNUR R...

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