Please enable JavaScript.
Coggle requires JavaScript to display documents.
FINANCIAL STATEMENTS ANALYSIS (Measuring Solvency Ratios Equity vs. debt,…
FINANCIAL STATEMENTS ANALYSIS
Tools of Analysis
Dollar/Rand and percentage
(percentage changes in
financial statement items) changes
Trend Percentages
(Shows growth
trend)
Components percentages/Common size
financial statements/Standardised financial
statements
(Express income statement items
as a % of sales and
balance sheet items as a percentage of total assets)
Ratios
(Relationship of one item to another)
Ratios
3. Activity ratios
Also called management ratios or efficiency
1. Short-term activity ratios
1. Inventory turnover
2.Average days inventory in stock
4.Average no of days receivables outstanding
3. Receivables Turnover
5. Payables Turnover
6. Creditors collection period
7. Working Capital Turnover
2. Long-term activity ratios
2. Total Asset Turnover
1.Fixed Asset Turnover
1. Liquidity ratios
Quick ratio
Cash Ratio
Current Ratio
4. Long-term debt and solvency ratios
2. Profitability ratios
1. Return on sales
Gross Profit Margin
Net Profit Margin
2. Return on Investments
3. Return on equity
4.Return on Assets
Operating and Cash Cycle
Measuring Solvency Ratios
Equity vs. debt
1. Debt to Equity
2.Debt Ratio