4财务管理专业英语
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4. Financial Ratio Analysis
4.1 Financial Ratio Analysis
财务比率分析
4.2 Liquidity Ratios
流动性比率
4.3 Debt Management Ratios
债务管理比率
山东轻工业学院商学院
1
4. Financial Ratio Analysis
4. Financial ratios do not provide analysts with all of the
answers about a firm’s
condition.
山东轻工业学院商学院
7
4.2 Liquidity Ratios
Liquidity ratios indicate a firm’s
山东轻工业学院商学院
19
4.2.1 Current ratio
Analysts should be aware that a firm’s managers may undertake year-end transactions, such as the one described above, to make certain ratios appear better following a period of disappointing performance.
山东轻工业学院商学院
9
4.2 Liquidity Ratios
Net working capital to total
assets ratio=
Net working capital
Total assets
净营运资本比总资产比率
山东轻工业学院商学院
10
4.2.1 Current ratio
山东轻工业学院商学院
23
4.2.2 Quick ratio
Current assets inventory Quick ratio Current liabilities
山东轻工业学院商学院
24
4.2.2 Quick ratio
The rationale for excluding inventory is that it is the least liquid of a firm’s current assets and may not be as readily available to meet a short-term maturing obligation as the other more liquid current assets.
Financial Ratio Analysis
财务比率分析的使用和限制
山东轻工业学院商学院
3
Analyzing Financial Ratios
Some preliminary comments are warranted:
1. Financial ratios are not
standardized.
4.4 Asset Management Ratios 资产管理比率 4.5 Profitability Ratios 盈利比率 4.6 Market Value Ratios 市场价值比率
山东轻工业学院商学院
2
4. Financial Ratio Analysis
4.7 Uses and Limitations of
山东轻工业学院商学院
4
Analyzing Financial Ratios
2. Analyzing a single financial ratio for a given year may not be very useful.
山东轻工业学院商学院
5
Analyzing Financial Ratios
山东轻工业学院商学院
25
4.2.2 Quick ratio
For any firm carrying an inventory balance, the quick ratio will be lower than the current ratio.
山东轻工业学院商学院
26
For example, suppose a firm’s current ratio has been fairly stable and consistent with industry averages over the past three years. But during the same period, the firm’s quick ratio has declined and is now below industry averages.
山东轻工业学院商学院
14
4.2.1 Current ratio
With LIFO inventory valuation, firms determine the value of cost of goods sold on the income statement by the cost of the inventory most recently produced;
山东轻工业学院商学院
16
4.2.1 Current ratio
The value of inventory reported on the balance sheet is from more recent periods and will be based on more recent (higher) cost data than the inventory balance of similar firms that use LIFO.
山东轻工业学院商学院
21
Latter
Did he walk or swim? The latter seems unlikely.
山东轻工业学院商学院
22
4.2.1 Current ratio
Managers or analysts can examine a firm’s common-size balance sheet over time to see relative changes in the composition of both current assets and current liabilities and assess changes or differences in liquidity.
18
4.2.1 Current ratio
Equal absolute changes in the numerator and denominator may lead to apparent improvements or deterioration in ratios that do not reflect real changes in performance.
山东轻工业学院商学院
28
4.2.3 Cash ratio
Cash marketable securities Cash ratຫໍສະໝຸດ Baiduo Current liabilities
山东轻工业学院商学院
29
4.2.3 Cash ratio
Analyzing a cash ratio, however, could be helpful for assessing a firm’s liquidity when the firm needs to pay most or all of its current liabilities with cash in the near term.
山东轻工业学院商学院
13
4.2.1 Current ratio
In an inflationary environment, firms that use last-in, first-out (LIFO) inventory valuation will likely have lower current ratios than firms that use first-in, first-out (FIFO).
山东轻工业学院商学院
17
4.2.1 Current ratio
Yet, if a firm has a current ratio that is less than one, the same transaction would lead to a lower current ratio.
山东轻工业学院商学院
山东轻工业学院商学院
15
4.2.1 Current ratio
Except in some declining cost industries, inflation will likely cause the value of this “older” inventory carried on the balance sheet to be less than the more recent cost of producing that inventory.
Current assets Current ratio Current liabilities
Denominator 分母
Numerator
分子
11
山东轻工业学院商学院
4.2.1 Current ratio
For example, a current ratio of 1.5 implies that a firm has $1.5 in current assets for every $1 in current liabilities and thus has 1.5 times the current assets, or has its current liabilities covered 1.5 times over.
ability to pay its obligations in
the short run.
山东轻工业学院商学院
8
4.2 Liquidity Ratios
Financial managers must pay close attention to liquidity ratios to ensure they reflect a high probability of the firm being able to promptly and fully pay its bills without undue stress.
山东轻工业学院商学院
20
4.2.1 Current ratio
One of the firms may have a substantial portion of its current assets tied up in inventories, while the other firm may have large cash and marketable securities.
4.2.2 Quick ratio
Whether the increase is likely temporary or permanent
How the firm finances the inventory
How the relative increases in inventory will affect the firm’s liquidity and overall performance
3. Some of a firm’s financial accounting practices or choices will affect its financial statements and, finally, its financial ratios.
山东轻工业学院商学院
6
Analyzing Financial Ratios
山东轻工业学院商学院
12
4.2.1 Current ratio
Excessively high current ratios, however, may indicated a firm may have too much of its longterm investor-supplied capital invested in short-term lowearning current assets.
4.1 Financial Ratio Analysis
财务比率分析
4.2 Liquidity Ratios
流动性比率
4.3 Debt Management Ratios
债务管理比率
山东轻工业学院商学院
1
4. Financial Ratio Analysis
4. Financial ratios do not provide analysts with all of the
answers about a firm’s
condition.
山东轻工业学院商学院
7
4.2 Liquidity Ratios
Liquidity ratios indicate a firm’s
山东轻工业学院商学院
19
4.2.1 Current ratio
Analysts should be aware that a firm’s managers may undertake year-end transactions, such as the one described above, to make certain ratios appear better following a period of disappointing performance.
山东轻工业学院商学院
9
4.2 Liquidity Ratios
Net working capital to total
assets ratio=
Net working capital
Total assets
净营运资本比总资产比率
山东轻工业学院商学院
10
4.2.1 Current ratio
山东轻工业学院商学院
23
4.2.2 Quick ratio
Current assets inventory Quick ratio Current liabilities
山东轻工业学院商学院
24
4.2.2 Quick ratio
The rationale for excluding inventory is that it is the least liquid of a firm’s current assets and may not be as readily available to meet a short-term maturing obligation as the other more liquid current assets.
Financial Ratio Analysis
财务比率分析的使用和限制
山东轻工业学院商学院
3
Analyzing Financial Ratios
Some preliminary comments are warranted:
1. Financial ratios are not
standardized.
4.4 Asset Management Ratios 资产管理比率 4.5 Profitability Ratios 盈利比率 4.6 Market Value Ratios 市场价值比率
山东轻工业学院商学院
2
4. Financial Ratio Analysis
4.7 Uses and Limitations of
山东轻工业学院商学院
4
Analyzing Financial Ratios
2. Analyzing a single financial ratio for a given year may not be very useful.
山东轻工业学院商学院
5
Analyzing Financial Ratios
山东轻工业学院商学院
25
4.2.2 Quick ratio
For any firm carrying an inventory balance, the quick ratio will be lower than the current ratio.
山东轻工业学院商学院
26
For example, suppose a firm’s current ratio has been fairly stable and consistent with industry averages over the past three years. But during the same period, the firm’s quick ratio has declined and is now below industry averages.
山东轻工业学院商学院
14
4.2.1 Current ratio
With LIFO inventory valuation, firms determine the value of cost of goods sold on the income statement by the cost of the inventory most recently produced;
山东轻工业学院商学院
16
4.2.1 Current ratio
The value of inventory reported on the balance sheet is from more recent periods and will be based on more recent (higher) cost data than the inventory balance of similar firms that use LIFO.
山东轻工业学院商学院
21
Latter
Did he walk or swim? The latter seems unlikely.
山东轻工业学院商学院
22
4.2.1 Current ratio
Managers or analysts can examine a firm’s common-size balance sheet over time to see relative changes in the composition of both current assets and current liabilities and assess changes or differences in liquidity.
18
4.2.1 Current ratio
Equal absolute changes in the numerator and denominator may lead to apparent improvements or deterioration in ratios that do not reflect real changes in performance.
山东轻工业学院商学院
28
4.2.3 Cash ratio
Cash marketable securities Cash ratຫໍສະໝຸດ Baiduo Current liabilities
山东轻工业学院商学院
29
4.2.3 Cash ratio
Analyzing a cash ratio, however, could be helpful for assessing a firm’s liquidity when the firm needs to pay most or all of its current liabilities with cash in the near term.
山东轻工业学院商学院
13
4.2.1 Current ratio
In an inflationary environment, firms that use last-in, first-out (LIFO) inventory valuation will likely have lower current ratios than firms that use first-in, first-out (FIFO).
山东轻工业学院商学院
17
4.2.1 Current ratio
Yet, if a firm has a current ratio that is less than one, the same transaction would lead to a lower current ratio.
山东轻工业学院商学院
山东轻工业学院商学院
15
4.2.1 Current ratio
Except in some declining cost industries, inflation will likely cause the value of this “older” inventory carried on the balance sheet to be less than the more recent cost of producing that inventory.
Current assets Current ratio Current liabilities
Denominator 分母
Numerator
分子
11
山东轻工业学院商学院
4.2.1 Current ratio
For example, a current ratio of 1.5 implies that a firm has $1.5 in current assets for every $1 in current liabilities and thus has 1.5 times the current assets, or has its current liabilities covered 1.5 times over.
ability to pay its obligations in
the short run.
山东轻工业学院商学院
8
4.2 Liquidity Ratios
Financial managers must pay close attention to liquidity ratios to ensure they reflect a high probability of the firm being able to promptly and fully pay its bills without undue stress.
山东轻工业学院商学院
20
4.2.1 Current ratio
One of the firms may have a substantial portion of its current assets tied up in inventories, while the other firm may have large cash and marketable securities.
4.2.2 Quick ratio
Whether the increase is likely temporary or permanent
How the firm finances the inventory
How the relative increases in inventory will affect the firm’s liquidity and overall performance
3. Some of a firm’s financial accounting practices or choices will affect its financial statements and, finally, its financial ratios.
山东轻工业学院商学院
6
Analyzing Financial Ratios
山东轻工业学院商学院
12
4.2.1 Current ratio
Excessively high current ratios, however, may indicated a firm may have too much of its longterm investor-supplied capital invested in short-term lowearning current assets.