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Guide to Financial Statement Analysis: Basis for Management Advice

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Description

Financial statements are a set of dynamic instruments that can be used for accurate, relevant and timely financial decisions.

This handy guide helps you:  

  • Examine the causes of common financial problems such as reduced liquidity, increased leverage and low profitability 
  • Devise ways to correct liquidity problems 
  • Use bankruptcy prediction models 
  • Understand how analytic tools help management make decisions

Table of Contents

  • Chapter 1—Firm Valuation
      • Overview
      • Introduction
    • Why Use a Valuation Technique?
    • Who Uses Valuation Techniques?
      • Owners
      • Potential Owners
      • Bankers
      • Security Analysts
    • Wells Fargo “Dividend Capitalization” Model
    • Dividend Computation for Privately-Held Corporation
  • Chapter 2—The Effect Ratios
      • Overview
      • Introduction
    • Effect Ratios
      • Liquidity Measures
      • Leverage Measures
      • Profitability Measures
    • Liquidity
    • Inventory to Working Capital
    • Trade Receivables to Working Capital Ratio
    • Net Sales to Working Capital
    • Debt Ratios
      • Tangible Debt Ratios
    • Current Liabilities to Net Worth
    • Times Interest Earned
    • Net Profit to Net Worth (Return on Equity)
    • Effect Ratio Summary
  • Chapter 3—Analysis of Profitability
      • Overview
      • Introduction
    • DuPont® System ROE
    • DuPont® System ROA
    • Total DuPont® System
    • EBITDA Analysis
    • Earnings Quality
      • Continuation of Earnings
      • Relationship of Earnings to Cash Flow
  • Chapter 4—Causal Ratios
      • Overview
      • Introduction
    • Causal Ratios
    • Fixed Assets to Net Worth
    • How Fixed Assets Affect Profit
    • Correction Procedures
    • Collection Period
    • Collection Period—Example
    • Impact of Collection Period on Profits
    • Correction Procedures
      • How to Correct an Abnormal Collection Period Ratio
    • Net Sales to Inventory (Inventory Turnover)
    • Net Sales to Inventory—Example
    • Correction Procedures
      • Sluggish Movement of Stock
    • Net Sales to Net Worth
      • The Trading Ratio
    • Trading Ratio—Example
    • Trading Ratio—Example
    • Overtrading Characteristics
    • Correction Procedures
      • Overtrading
    • The Profit Margin
    • The Profit Margin—Example
    • Correction Procedures for a Low or Negative Profit Margin
    • Miscellaneous Assets to Net Worth
    • Correction Procedures
      • Investment in Miscellaneous Assets
    • Causal Ratio Summary
  • Chapter 5—How to Conduct a Financial Statement Analysis
      • Overview
      • Introduction
    • How to Conduct an Analysis of Financial Statements
    • Industry and Time Series Analysis
    • Sources of Industry Averages
      • Primary Sources
      • Other Sources
    • Problems With Using Industry Data
    • An Example of Computing Industry Statistics, a Common-Sized Balance Sheet
    • An Example of Computing Industry Statistics From Dun and Bradstreet® Data
    • Guidelines to Use in Applying Ratio Analysis
  • Chapter 6—Case Studies
    • Case Study 1—Manufacturer of Boxes
      • Effect Ratio Summary
      • Causal Ratio Summary
      • Recommendation
    • Case Study 2—National West Airline
      • National West Airline
      • Analysis—Causal Ratios
      • Year 20Y9—External Shock
    • Case Study 3—Firm A
      • Analysis—Effect Ratios
      • Analysis—Causal Ratios
      • Summary
    • Case Study 4—Store Container Corporation
      • Analysis—Effect Ratios
      • Analysis—Causal Ratios
    • Case Study 5—Biscayne Apparel
      • Analysis—Effect Ratios
      • Analysis—Causal Ratios
  • Chapter 7—Users of Financial Statements
      • Overview
      • Introduction
    • Ratios Examined by Banks for Short-Term Loans
    • Ratios Examined by Banks for Long-Term Loans
    • Commercial Loan Departments’ Most Significant Ratios and Their Primary
    • Measures—Gibson’s Study
    • Commercial Loan Departments’ Ratios Appearing Most Frequently in Loan Agreements
    • Corporate Controllers’ Most Significant Ratios and Their Primary Measures
    • Ratios Appearing in Corporate Objectives and Their Primary Measures
  • Chapter 8—Forecasting Sustainable Growth
      • Overview
      • Introduction
    • Definitions
    • Derivation of the Sustainable Growth Model
    • The Alabama Door Company Sustainable Growth—Example
      • Assumptions
      • Class Exercise
    • Calculation of Alabama Door Growth Rate
    • Improving Sustainable Growth
    • Sustainable Growth—Available External Equity
  • Chapter 9—Case Problem
      • Overview
      • Introduction
    • Marine Supply Company Balance Sheet
    • Marine Supply Company Selected Income Figures
    • Marine Supply Company Selected Financial Ratios
      • Solution to Case
  • Chapter 10—Forecasting Bankruptcy
      • Overview
      • Introduction
    • Altman’s© Bankruptcy Prediction Formula
      • Altman’s© Suggested Z-Score Cutoff
      • Computational Note
      • Usage Notes
    • Bankruptcy Prediction Example
    • Altman’s© Second Model
      • Critical Values

Excerpts

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Paperback 2006
Product# 091022
Availability:In Stock
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