Kế toán, kiểm toán - Chapter 20: Company performance: comprehensive evaluation

Chapter 20Company Performance: Comprehensive EvaluationCopyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin20-*What is the Relationship Among Product, Capital, and Information Markets?ProductProviders sell, and consumers buy, goods/servicesCapitalOwners of capital give, and providers use, capitalInformationProviders disclose, and owners of capital evaluate, financial results20-*What are the Activities Involved in Annual Report Analysis?Study financial statements/annual reportIndustry analysisStatement analysis20-*What is Vertical Analysis and Why is it Important?Vertical analysisRelative size of each item on the income statement and balance sheet in relation to a base item (sales or total assets)ImportanceReveals the relative importance of financial statement items20-*What is Horizontal Analysis and Why is it Important?Horizontal analysisComparison of each item on the income statement and balance sheet to itself over timeImportanceReveals trends in financial statement items20-*What is Ratio Analysis and Why is it Important?Ratio analysisShows relationship between related financial statement itemsImportanceReveals important relationships that provide information about past performance20-*What are the Activity Ratios and Why are They Important?Accounts receivable turnoverSales/Average accounts receivableInventory turnoverCost of goods sold/Average inventoryAccounts payable turnoverCost of goods sold/Average accounts payableEvaluate the efficiency of operations20-*What are the Liquidity Ratios and Why are They Important?Current ratioCurrent assets/Current liabilitiesQuick ratioLiquid assets/Current liabilitiesCash flow per shareOperating cash flows/Weighted average number of common shares outstandingEvaluate the short-term cash position20-*What are the Debt-Paying Ability Ratios and Why are They Important?Times interest earnedIncome before interest and taxes/Interest expenseDebt to equityTotal debt/Total owners’ equityEvaluate the ability to meet long-term obligations20-*What are the Profitability Ratios and Why are They Important?Gross marginGross margin/SalesReturn on salesIncome from continuing operations/SalesReturn on assetsIncome before interest and taxes/Total average assets20-*Profitability Ratios ContinuedReturn on owners’ equityNet income/Total average owners’ equityReturn on common equity(Net income – Preferred dividends)/Total average common equityEarnings per share(Net income – Preferred dividends)/Weighted average number of common shares outstanding20-*Profitability Ratios ContinuedDividend payout Dividends per share (common)/Earnings per share Evaluate the efficiency and effectiveness of operating, financing, and investing activities20-*What are Market-Based Ratios and Why are They Important?Price-earningsMarket price per share (common)/Earnings per shareDividend yieldDividends per share (common)/Market price per share (common)Evaluate the current selling price of common stock relative to earnings/dividends20-*What Other Annual Report Information Should be Analyzed in Addition to the Financial Statements and Notes?Management’s letter to stockholdersSegment and quarterly dataAuditor’s report20-*What are the Four Types of Auditor Reports?Unqualified opinionGAAP was followedQualified opinionParts of the financial statements did not follow GAAP or the ability to examine records was impairedAdverse opinionGAAP was not followedDisclaimer of opinionAuditor was unable to gather sufficient data to support an opinion