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Financial Statement, Ratio Analysis, and Forecasting Notes

Financial Statement, Ratio Analysis, and Forecasting Notes. Financial Statements. The Income Statement components Sales Variable costs SGA Depreciation EBIT Net Income. Financial Statements. The Balance Sheet “Box”. Financial Statements. Sources and Uses Statement.

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Financial Statement, Ratio Analysis, and Forecasting Notes

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  1. Financial Statement, Ratio Analysis, and Forecasting Notes Financial Statements, Forecasting, and Ratio Analysis

  2. Financial Statements • The Income Statement components Sales Variable costs SGA Depreciation EBIT Net Income Financial Statements, Forecasting, and Ratio Analysis

  3. Financial Statements • The Balance Sheet “Box” Financial Statements, Forecasting, and Ratio Analysis

  4. Financial Statements • Sources and Uses Statement Financial Statements, Forecasting, and Ratio Analysis

  5. Financial Statements • Statement of Cash Flows CF from Operating Activities CF from Investing Activities CF from Financing Activities Net Change in CF Financial Statements, Forecasting, and Ratio Analysis

  6. Financial Statements • Some accounting terms: • Accruals • Prepaids • Goodwill • Depreciation • Cash flow • Operating cash flow • Net cash flow • Free cash flow • Market versus book values Financial Statements, Forecasting, and Ratio Analysis

  7. Ratio Analysis • Issues • Knowledge of firm and industry • Knowledge of what’s behind the numbers • Book versus market • Past versus future • Ratios are relative, not absolute Financial Statements, Forecasting, and Ratio Analysis

  8. Ratio Analysis • Reporting frameworks • By ratio category • Liquidity/working capital • Asset management/efficiency • Debt level/coverage degree • Profitability • Market based (EPS/EVA) Financial Statements, Forecasting, and Ratio Analysis

  9. Ratio Analysis • Reporting frameworks • Time series-historical and projected • Cross sectional (industry benchmark) • Dupont framework • ROE, ROA, Equity Multiplier Financial Statements, Forecasting, and Ratio Analysis

  10. Ratio Analysis • Managing Growth • Internal growth rate • Sustainable growth rate • Options if actual growth is greater than sustainable growth Financial Statements, Forecasting, and Ratio Analysis

  11. Forecasting • Forecast statements • Sales/Income • Balance Sheet • Cash flow Financial Statements, Forecasting, and Ratio Analysis

  12. Forecasting • Key connections between IS and BS Financial Statements, Forecasting, and Ratio Analysis

  13. Forecasting • Forecasting “Drivers” Financial Statements, Forecasting, and Ratio Analysis

  14. Forecasting • Forecasting “Drivers” Financial Statements, Forecasting, and Ratio Analysis

  15. Sensitivity and Scenario Analysis Financial Statements, Forecasting, and Ratio Analysis

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