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Analyzing Company Financial Information

Analyzing Company Financial Information. CON 389. Financial Statements. Different entities and people look for different things in the financial documents. Investors Banks Sureties. Tools for Financial Analysis. Comparative Financial Statements

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Analyzing Company Financial Information

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  1. Analyzing Company Financial Information CON 389

  2. Financial Statements • Different entities and people look for different things in the financial documents. • Investors • Banks • Sureties

  3. Tools for Financial Analysis • Comparative Financial Statements • Trends over multiple years of financial information for a company • Index-number trend series • Converts the financial information into index numbers, with a base year to view trends • Common Size Financial Statement • Percentage Perspective Analysis • Ratio Analysis • Gives a perspective on one item in relation to another, with can be compared

  4. Comparative Financial Statements • Trends over multiple years of financial information for a company Balance-Sheet Trend Chart From Page 96 - Halpin

  5. Index-Number Trend Series • Converts the financial information into index numbers, with a base year to view trends Halpin Page 97 - Tab. 6.2

  6. Trend Chart Based on Index Numbers Halpin Page 98 - Fig. 6.2

  7. Common Size Financial Statement • Gives a proportional perspective of the financial information.

  8. Mock Construction Balance Sheet Structural Breakdown

  9. Ratio Analysis • Relationships of one item in relation to another when compared to: • Past ratios of the company • Industry standards • Trends over time • Types of Ratios • Liquidity ratios • Leverage ratios • Activity ratios • Profitability ratios

  10. Types of RatiosRatio Analysis • Liquidity ratios • Relates a firm’s liquidable assets with its short-term obligations. • Relates Current Assets to Current Liabilities • Leverage ratios • Debt-management ratios • A company gains leverage by borrowing • Relate Deb to some other parameter • Activity ratios • Turnover of sales. • Revenues to other balance sheet items • Profitability ratios or Return on Investment

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