96 pm 697 roa 1666 roe 2949 22 22 aeropostale extended

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Unformatted text preview: = 1,204.35 ÷ Fixed Assets = 164.62 TA = 503.96 + COGS = - 841.87 SG&A = - 227.04 Cash = 225.27 Interest = - (3.67) Taxes = - 55.15 Current Assets = 339.34 Inventory = 91.91 Other CA = 22.16 23 23 Why Evaluate Financial Why Statements? Statements? Internal uses Performance evaluation – compensation and Performance comparison between divisions comparison Planning for the future – guide in estimating future Planning cash flows cash External uses Creditors Suppliers Customers Stockholders 24 24 Benchmarking Ratios are not very helpful by themselves; they Ratios need to be compared to something need Time-Trend Analysis Used to see how the firm’s performance is changing Used through time through Internal and external uses Peer Group Analysis Compare to similar companies or within industries SIC and NAICS codes 25 25 Potential Problems There is no underlying theory, so there is no way to There know which ratios are most relevant know Benchmarking is difficult for diversified firms Globalization and international competition makes Globalization comparison more difficult because of differences in accounting regulations accounting Varying accounting procedures, i.e. FIFO vs. LIFO Different fiscal years Extraordinary events 26 26 Work the Web Example The Internet makes ratio analysis much easier The than it has been in the past than Click on the web surfer to go to Click www.investor.reuters.com Choose a company and enter its ticker symbol Click on Ratios and then Financial Condition and see Click what information is available what 27 27 Quick Quiz What is the Statement of Cash Flows and how do you What determine sources and uses of cash? determine How do you standardize balance sheets and income How statements and why is standardization useful? statements What are the major categories of ratios and how do you What compute specific ratios within each category? compute What are some of the problems associated with financial What statement analysis? statement 28 28 3 End of Chapter 29 Comprehensive Problem XYZ Corporation has the following XYZ financial information for the previous year: financial Sales: $8M, PM = 8%, CA = $2M, FA = Sales: $6M, NWC = $1M, LTD = $3M $6M, Compute the ROE using the DuPont Compute Analysis. Analysis. 30 30...
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