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FSA Formulas ++ Notes

The document discusses various financial ratios used to analyze a company's financial statements. It covers ratios to analyze liquidity (current ratio, acid test ratio), solvency (debt ratio, debt-equity ratio, times interest earned), activity (receivable turnover, inventory turnover, asset turnover, collection period), profitability (return on sales, return on assets, return on equity, earnings per share, dividend payout ratio), and other valuation metrics (price-earnings ratio, enterprise value to EBITDA, Dupont analysis). The ratios use data from the income statement, balance sheet, and statement of cash flows to evaluate the company's performance and financial health.

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JOHN RYAN JINGCO
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55 views2 pages

FSA Formulas ++ Notes

The document discusses various financial ratios used to analyze a company's financial statements. It covers ratios to analyze liquidity (current ratio, acid test ratio), solvency (debt ratio, debt-equity ratio, times interest earned), activity (receivable turnover, inventory turnover, asset turnover, collection period), profitability (return on sales, return on assets, return on equity, earnings per share, dividend payout ratio), and other valuation metrics (price-earnings ratio, enterprise value to EBITDA, Dupont analysis). The ratios use data from the income statement, balance sheet, and statement of cash flows to evaluate the company's performance and financial health.

Uploaded by

JOHN RYAN JINGCO
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Financial Statement Analysis:

2/15, N/60 = if you pay within 15 days, I will give you 2% discount but please pay within 60 days*

Income Statement Account provides information for a particular period of time*

Vertical Analysis:

(Balance sheet): ACCT/ASSET

(Income Statement): ACCT/SALES

Horizontal Analysis:

(Current Year – Prior Year) / Prior Year

Trend Analysis (hybrid of horizontal and vertical):

Base year is first year of comparison*

Current Year / Base Year

I. Liquidity: (Short Term)


1. Working Capital = CURRENT ASSET – CURRENT LIABILITY
2. Current Ratio = CA / CL
3. Acid Test Ratio / Quick Ratio = QUICK ASSETS / CL
a. Quick Assets = CA – INVENTORY – PREPAYMENTS

Prepayments - expenses already paid but not yet incurred*

Difference of Current Ratio and Quick Ratio = Inventory*

II. Solvency: (Long Term)


4. Debt Ratio= Total Liabilities/ Total Asset
5. Equity Ratio= Total Equity / TA
6. Debt – Equity Ratio = TL / TE
DER < 100%, lamang Equity sa debt or liab*
7. Times Interest Earned (Interest Coverage Ratio) = OPERATING INCOME / INTEREST EXPENSE

III. Activity Ratio:


8. Receivable Turnover = Credit Sales / Ave AR

Kung ano first word sya ung denominator*. RT measures how fast can you convert sales to
AR or how fast you collect your AR.

Credit Sales = Income Statement Account


AR = Balance Sheet Account

If CS is not given, assume all sales are CS.

a. Average AR = (Beginning AR + Ending AR) / 2


9. Inventory Turnover = Cost of Goods Sold (COGS) / AVE INV
a. AVE INV = (Beginning INV + Ending INV) / 2
10. Asset Turnover = TOTAL SALES / AVE ASSET
11. Collection Period or Day Sales Outstanding (dso) = 360 / RTO
12. Holding Period = 360/ITO

IV. Profitability:
13. Rate of Return on Sales (ROS / Profit Margin; PM) = NET INCOME / NET SALES
14. Rate of Return on Assets (ROA) = NET INCOME / AVE ASSETS
15. Rate of Return on Equity (ROE) = NET INCOME / AVE EQUITY
16. Earnings per Share (BEPS) = (NET INCOME – PREFERRED DIVIDENDS) / AVE OUTSTANDING
COMMON SHARES

Outstanding share = cs (common shares)/par

17. Dividend Payout Ratio = Dividends Per Share / Earnings Per Share

TIE = EBIT / Interest

Common Stock = Total Liabilities and Equity - (Current Liabilities + Long-term Debt + Retained Earnings)

M/B:

Market Capitalization/Book value

Market Capitalization = Current Market Price per share * Total Number of Outstanding Shares

P/E Ratio = Market Price/EPS

EV/EBITDA = Enterprise Value / EBITDA

EV = Market capitalization + Long term debt + notes payable – cash

EBITDA = EBIT + Depreciation

Dupoint:

ROE = Profit Margin * Total Assets Turnover * Equity Multiplier

Equity Multiplier = ROE/ROA

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