get rich quick co. financial statement ratio analysis: profitability long-term financial position...
TRANSCRIPT
GET RICH QUICK CO.
Financial Statement Ratio Analysis:Profitability
Long-Term Financial Position
Short-Term Financial Position
Basics of FSA
• These ratios do not exist in a vacuum
• By themselves, they do not provide much meaning
• They need to be compared to something:– Trends over time
– Key competitors
– Industry averages
PROFITABILITYEARNINGS PER SHARE
PROFITABILITYEARNINGS PER SHARE
Net Income – Preferred Dividends
PROFITABILITYEARNINGS PER SHARE
Net Income – Preferred Dividends
Number of Common Shares Outstanding
PROFITABILITYEARNINGS PER SHARE
Net Income – Preferred Dividends
Number of Common Shares Outstanding
$180,000- 0
PROFITABILITYEARNINGS PER SHARE
Net Income – Preferred Dividends
Number of Common Shares Outstanding
$180,000 - 0
100,000 shares
PROFITABILITYEARNINGS PER SHARE
Net Income – Preferred Dividends
Number of Common Shares Outstanding
$180,000 - 0 = $1.80
100,000 shares
PROFITABLITYPRICE/EARNINGS RATIO
PROFITABLITYPRICE/EARNINGS RATIO
Market Price per Share
PROFITABLITYPRICE/EARNINGS RATIO
Market Price per Share
Earnings per Share
PROFITABLITYPRICE/EARNINGS RATIO
Market Price per Share
Earnings per Share
$18.00
PROFITABLITYPRICE/EARNINGS RATIO
Market Price per Share
Earnings per Share
$18.00
$1.80
PROFITABLITYPRICE/EARNINGS RATIO
Market Price per Share
Earnings per Share
$18.00 = 10
$1.80
PROFITABILITYRETURN ON ASSETS
PROFITABILITYRETURN ON ASSETS
(Income + Interest Exp.) X Sales
Sales Assets
PROFITABILITYRETURN ON ASSETS
(Income + Interest Exp.) X Sales
Sales Assets
(Operating Margin) X (Asset Turnover)
PROFITABILITYRETURN ON ASSETS
(Income + Interest Exp.) X Sales
Sales Assets
(Profit Margin) X (Asset Turnover)
($180,000+30,000)
$3,000,000
PROFITABILITYRETURN ON ASSETS
(Income + Interest Exp.) X Sales
Sales Assets
(operating Margin) X (Asset Turnover)
$180,000+30,000 X $3,000,000 = 13%
$3,000,000 $1,620,000
PROFITABILITYRETURN ON EQUITY
PROFITABILITYRETURN ON EQUITY
Net Income
PROFITABILITYRETURN ON EQUITY
Net Income
Stockholders’ Equity
PROFITABILITYRETURN ON EQUITY
Net Income
Stockholders’ Equity
$180,000
PROFITABILITYRETURN ON EQUITY
Net Income
Stockholders’ Equity
$180,000
$1,080,000
PROFITABILITYRETURN ON EQUITY
Net Income
Stockholders’ Equity
$180,000 = 16.7%
$1,080,000
LONG-TERM FIN. CONDITIONRATIO OF DEBT TO ASSETS
LONG-TERM FIN. CONDITIONRATIO OF DEBT TO ASSETS
Liabilities
LONG-TERM FIN. CONDITIONRATIO OF DEBT TO ASSETS
Liabilities
Assets
LONG-TERM FIN. CONDITIONRATIO OF DEBT TO ASSETS
Liabilities
Assets
$540,000
LONG-TERM FIN. CONDITIONRATIO OF DEBT TO ASSETS
Liabilities
Assets
$540,000
$1,620,000
LONG-TERM FIN. CONDITIONRATIO OF DEBT TO ASSETS
Liabilities
Assets
$540,000 = 33.3%
$1,620,000
LONG-TERM FIN. CONDITIONRATIO OF EQUITY TO ASSETS
LONG-TERM FIN. CONDITIONRATIO OF EQUITY TO ASSETS
Stockholders’ Equity
LONG-TERM FIN. CONDITIONRATIO OF EQUITY TO ASSETS
Stockholders’ Equity
Assets
LONG-TERM FIN. CONDITIONRATIO OF EQUITY TO ASSETS
Stockholders’ Equity
Assets
$1,080,000
LONG-TERM FIN. CONDITIONRATIO OF EQUITY TO ASSETS
Stockholders’ Equity
Assets
$1,080,000
$1,620,000
LONG-TERM FIN. CONDITIONRATIO OF EQUITY TO ASSETS
Stockholders’ Equity
Assets
$1,080,000 = 66.7%
$1,620,000
CURRENT FIN. CONDITIONCURRENT RATIO
CURRENT FIN. CONDITIONCURRENT RATIO
Current Assets
CURRENT FIN. CONDITIONCURRENT RATIO
Current Assets
Current Liabilities
CURRENT FIN. CONDITIONCURRENT RATIO
Current Assets
Current Liabilities
$280,000
CURRENT FIN. CONDITIONCURRENT RATIO
Current Assets
Current Liabilities
$280,000
$40,000
CURRENT FIN. CONDITIONCURRENT RATIO
Current Assets
Current Liabilities
$280,000 = 7
$40,000
CURRENT FIN. CONDITIONQuick Ratio
CURRENT FIN. CONDITIONQuick Ratio
“Quick Assets”
CURRENT FIN. CONDITIONQuick Ratio
“Quick Assets”
Current Liabilities
CURRENT FIN. CONDITIONQuick Ratio
“Quick Assets”
Current Liabilities
$200,000
CURRENT FIN. CONDITIONQuick Ratio
“Quick Assets”
Current Liabilities
$200,000
$40,000
CURRENT FIN. CONDITIONQuick Ratio
“Quick Assets”
Current Liabilities
$200,000 = 5
$40,000
CURRENT FIN. CONDITIONAvg. Collection Period
CURRENT FIN. CONDITIONAvg. Collection Period
Accounts Receivable
CURRENT FIN. CONDITIONAvg. Collection Period
Accounts Receivable
Average “Daily Sales”
CURRENT FIN. CONDITIONAvg. Collection Period
Accounts Receivable
Average “Daily Sales”
$150,000
CURRENT FIN. CONDITIONAvg. Collection Period
Accounts Receivable
Average “Daily Sales”
$150,000
$3,000,000 /360 days (= $8,333)
CURRENT FIN. CONDITIONAvg. Collection Period
Accounts Receivable
Average “Daily Sales”
$150,000 = 18 days
$3,000,000 /360 days (= $8,333)
CURRENT FIN. CONDITIONAvg. Days Supply in Inventory
CURRENT FIN. CONDITIONAvg. Days Supply in Inventory
Inventory
CURRENT FIN. CONDITIONAvg. Days Supply in Inventory
Inventory
Avg. “Daily Cost of Goods Sold”
CURRENT FIN. CONDITIONAvg. Days Supply in Inventory
Inventory
Avg. “Daily Cost of Goods Sold”
$80,000
CURRENT FIN. CONDITIONAvg. Days Supply in Inventory
Inventory
Avg. “Daily Cost of Goods Sold”
$80,000
$2,000,000/360 days (= $5,555)
CURRENT FIN. CONDITIONAvg. Days Supply in Inventory
Inventory
Avg. “Daily Cost of Goods Sold”
$80,000 = 14.4 days
$2,000,000/360 days (= $5,555)
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