Kế toán doanh nghiệp - Chapter 13: Analyzing and interpreting financial statements

Financial AccountingJohn J. WildSeventh Edition Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Chapter 13Analyzing and Interpreting Financial StatementsLiquidity and EfficiencySolvencyProfitabilityMarketProspectsAbility to meet short-term obligations and to efficiently generate revenuesAbility to generate future revenues and meet long-term obligationsAbility to generate positive market expectationsAbility to provide financial rewards sufficient to attract and retain financingBuilding Blocks of AnalysisC113-*Standards for ComparisonWhen interpreting measures, we need to decide whether the measures indicate good, bad, or average performance. We can use the following to make that judgment:IntracompanyCompetitorIndustryGuidelines (rules of thumb)13-*C2Horizontal AnalysisComparing a company’s financial condition and performance across time.Tools of AnalysisComparing a company’s financial condition and performance to a base amount.Vertical AnalysisMeasurement of key relations between financial statement items.13-*C1Ratio AnalysisCalculate Change in Dollar AmountDollarchangeAnalysis period amountBase periodamount=–Since we are measuring the amount of the change between 2013 and 2012, the dollar amounts for 2012 become the “base” period amounts.Horizontal AnalysisComparative StatementsP1Calculate Change as a PercentPercentchangeDollar change Base period amount100=×13-*Trend analysis is used to reveal patterns in data covering successive periods.Trendpercent Analysis period amount Base period amount100=×Horizontal AnalysisTrend AnalysisP113-*Calculate Common-Size PercentCommon-size percentAnalysis amountBase amount100=×Financial Statement Base AmountBalance Sheet Total AssetsIncome Statement RevenuesVertical AnalysisCommon-Size StatementsP213-*CLOVER CORPORATION Comparative (Partial) Balance Sheets December 31, 2013 Common-Size Percents*2013201220132012Liabilities and Shareholders' EquityCurrent liabilities: Accounts payable67,000$ 44,000$ 21.3%15.2% Notes payable3,000 6,000 1.0%2.1% Total current liabilities70,000$ 50,000$ 22.2%17.3%Long-term liabilities: Bonds payable, 8%75,000 80,000 23.8%27.6% Total liabilities145,000$ 130,000$ 46.0%44.9%Shareholders' equity: Preferred stock20,000 20,000 6.3%6.9% Common stock60,000 60,000 19.0%20.7% Additional paid-in capital10,000 10,000 3.2%3.5% Total paid-in capital90,000$ 90,000$ 28.6%31.1%Retained earnings80,000 69,700 25.4%24.1% Total shareholders' equity170,000$ 159,700$ 54.0%55.1%Total liabilities and shareholders' equity315,000$ 289,700$ 100.0%100.0%* Percent rounded to first decimal point.P213-*Current RatioAcid-test RatioAccounts Receivable TurnoverInventory TurnoverDays’ Sales UncollectedDays’ Sales in InventoryTotal Asset TurnoverRatio AnalysisLiquidity and EfficiencyP313-*DebtRatioEquityRatioDebt-to-Equity RatioTimes Interest EarnedSolvencyP313-*Ratio AnalysisSolvency RatiosProfit MarginGross MarginReturn on Total AssetsBasic Earnings per ShareBook Value per Common ShareReturn on Common Stockholders’ EquityRatio AnalysisProfitabilityP313-* Use this information to calculate the market ratios for Norton Corporation.Market Prospects13-*P3Summarizing ResultsA financial statement analysis report helps by directly assessing the building blocks of analysis and by identifying weaknesses in inference and by requiring explanation. It usually consists of six sections:Executive summaryAnalysis overviewEvidential matterAssumptionsKey FactorsInferences13-*A1End of Chapter 1313-*