Kế toán, kiểm toán - Chapter 13: Analyzing financial statements

Financial and Managerial AccountingWild, Shaw, and Chiappetta Fourth Edition McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.Chapter 13Analyzing Financial StatementsConceptual Learning ObjectivesC1: Explain the purpose and identify the  building blocks of analysis.C2: Describe standards for comparisons  in analysis.13-*A1: Summarize and report results of analysis.A2: Appendix 13A – Explain the form and assess the content of a complete income statement (see text for details).Analytical Learning Objectives13-*P1: Explain and apply methods of  horizontal analysis.P2: Describe and apply methods of  vertical analysis.P3: Define and apply ratio analysis.Procedural Learning Objectives13-*Liquidity 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 (rule of thumb)C 213-*Horizontal AnalysisComparing a company’s financial condition and performance across time.Tools of AnalysisC 1Comparing a company’s financial condition and performance to a base amount.Vertical AnalysisMeasurement of key relations between financial statement itemsRatio Analysis13-*Calculate Change in Dollar AmountDollarchangeAnalysis period amountBase periodamount=–Since we are measuring the amount of the change between 2011 and 2010, the dollar amounts for 2010 become the “base” period amounts.Comparative StatementsP 1Calculate 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=×Trend AnalysisP 113-*Calculate Common-size PercentCommon-size percentAnalysis amountBase amount100=×Financial Statement Base AmountBalance Sheet Total AssetsIncome Statement RevenuesCommon-Size StatementsP 213-*CLOVER CORPORATIONComparative (Partial) Balance SheetsDecember 31, 2011 Common-size Percents*2011201020112010Liabilities 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.P 213-*Current RatioAcid-test RatioAccounts Receivable TurnoverInventory TurnoverDays’ Sales UncollectedDays’ Sales in InventoryTotal Asset TurnoverLiquidity and EfficiencyP 313-*DebtRatioEquityRatioPledged Assets to Secured LiabilitiesTimes Interest EarnedSolvencyP 313-*Profit MarginGross MarginReturn on Total AssetsBasic Earnings per ShareBook Value per Common ShareReturn on Common Stockholders’ EquityProfitabilityP 313-*Summarizing 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 FactorsInferencesA113-*End of Chapter 1313-*