會(huì)計(jì)英語(yǔ)第5版教學(xué)課件lesson9

LessonNine:

Interpretation

ofFinancialStatementsAims:1.Toexplainthebasicsourceoffinancialstatementanalysis.2.Tocalculateaccountingratiosandknowhowaretheseratiosusedtoanalyzefinancialstatements.3.Todeveloptheabilitytoanalyzethefinancialstatementsofanorganization.4.Todescribetheimportanceoffinancialanalysiswhenmakingdecisions.9.1

IntroductiontoFinancialStatementAnalysis(1)Anappreciationofhowthefiguresinthefinancialstatementshavebeencompiled.i.e.athoroughknowledgeofbasicbookkeepingandthefundamentalaccountingconcepts;(2)Anawarenessoftheusersoffinancialstatementsandtheirspecificneeds;(3)Anunderstandingofthedeficienciesofthefinancialstatements,especiallywherehistoricalcostaccountinghasbeenused;(4)Theabilitytoanalyzeandquestiontheinformationgiven.Thefiguresinthefinancialstatementsshouldrarelybetakenatfacevalue;(5)Anappreciationofthetypeofbusinessundertakenbythecompanyandanawarenessofinternalandexternalfactorswhichmayaffectthebusiness;(6)Theabilitytocommunicateinformationinaclearandconcisemannerintheformofwrittenreportsorbusinessletters,ororallyinmeetings.9.2

RatioAnalysisTheusersoffinancialstatementswillanalyzeandappraisethestatementsbyexaminingthefiguresandmakingcomparisonswith:(1)Correspondingfiguresfromdifferentaccountingperiods.(2)Forecastorbudgetedfigures;(3)Thesamefiguresintheaccountsofasimilarorganization.

CompanyACompanyBNetprofitfortheyear$10000$50000IsCompanyBmoreprofitablethanCompanyA?

CompanyACompanyBNetprofitfortheyear$10000$50000Totalcapitalemployed

(=Netassetsemployed)$30000$200000Profitabilitydependsontheamountoftheprofitinrelationtothevalueoftheresourcesemployedbytheorganization？

CompanyACompanyBProfit$10000$50000Capitalemployed(Netassets)$30000$200000Returnoncapitalemployed/Returnonnetassets

33.3%

25%ItwouldnowappearthatCompanyAismoreprofitablethanCompanyBasCompanyAhasmadebetteruseofitsresources.9.3

TheUsesofRatioAnalysisRatioanalysisisausefultooltoindicatespecificareasofabusinesswhichmeritfurtherinvestigation.Thecalculationofrelevantratioswillprovidetheuserwithanumberofpertinentquestionstowhichtheremaybeanumberofalternativeanswers.9.4

TheLimitationsofRatioAnalysisRatioswillsufferfromthesamedeficienciesastheinformationfromwhichtheyarecalculated.Thefinancialstatementsofmostorganizationshavemajordrawbacks:1.HistoricalCostAccounting2.SeasonalFluctuations3.TimeLag4.Aggregation5.WindowDressing6.Non-standardizationofAccountingPolicies7.DifferentPatternsofAssetOwnership9.6

ProfitabilityRatiosProfitabilityistheabilityofanentitytoearnprofits.Thisabilitytoearnprofitsdependsupontheeffectivenessandefficiencyofoperationsaswellasresourcesavailabletotheenterprise.Theseareusuallyexpressedasapercentageandareusedtocommentontheprofitandlossaccountfigures.Itisanimportantratioandisoftenknownastheprimaryratio.Itisameasureoftheoverallprofitabilityofthebusiness.Itshowsthepercentagereturnonthecapitalinvestedinthebusiness.Itshowshowmuchprofithasbeenearnedforevery$100invested.Itindicateshowefficientlymanagementisusingthebusinessresourcestoearnprofits.（1）

ReturnonCapitalEmployed(ROCE)orReturnonNetAssets(RONA)CapitalEmployed20182019Ordinaryshares200200Preferenceshares100100Reserves:

P&L106180SharePremium——LoanCapital:

Debentures100100CapitalEmployed506580(1)ReturnonCapitalEmployed(ROCE)orReturnonNetAssets(RONA).Profitwillbethegain(beforetaxationinthisexample)generatedfromtheuseofca-pitalasdefinedabovei.e.Return(beforetax)20182019Profitbeforetaxation132152AddDeb.Interest

88Return140160Thenetprofitratioisnetprofitasapercentageofsales.Itshowshowmuchnetprofitisearnedforevery$1ofsalerevenue.20122013Profit140160Sales8001

000Net

Profit

Margin17.5%16%(2)NetProfitRatio.Thegrossprofitmarginisthegrossprofitasapercentageofsales.Itshowshowmuchgrossprofithasbeenmadeforevery$100ofsales.Salesmarginsvarywidelybetweendifferentindustriesbuttendtobesimilarwithinindustries.20122013Gross

Profit250300Sales8001

000Gross

Profit

Margin31.25%30%(3)GrossProfitMargin.Theoverheadstosalesratioistheoverheadsasapercentageofsales.Assalesvolumeincreases,thisratioshoulddecrease.20122013Overheads120150Sales8001

000Overheads

to

sales15%15%(4)OverheadstoSalesRatio.9.7

InvestorsRatiosandGearingGearingmeasurestheproportionofcapitalemployedsubscribedbydebtcapital(borrowingpluspreferenceshares)asopposedtoequity(ordinarysharesplusreserves).20122013Debt

capital(100+100)(100+100)Total

capital

employed506580Gearing

Ratio39.5%34.5%9.8

StockMarketRatiosDividendyieldisameasureoftherevenueearningcapacityofasharetoitsshareholder.Itrelatesthedividendfortheyeartothemarketvalueoftheshare.20122013Dividendforyear7.5￠10￠×100Marketvalue200￠250￠DividendYield3.75%4%（1）StockMarketRatiosEarningspersharerelatestheprofitsearnedbytheordinaryshares(irrespectiveofthesizeofthedividend)tothenumberofissuedordinaryshares.20122013Profitforthefinancialyear(aftertax)90100LessPreferencedividend66Ordinaryshareearnings8494Numberofordinaryshares200200Earningsperordinaryshare

42￠

47￠（2）

EarningsPerShare(EPS)Theprice/earningsratiorelatesthemarketvalueofasharetotheearningspershare.Thisfacilitatesthecomparisonoftheperformanceofthesharesofdifferentcompanies.20122013Market

Value200250Earnings

per

share4247P/E4.85.3（3）

PriceEarningsRatio(P/E)9.9

LiquidityRatiosTheseratiosareusedtoassesstheabilityoftheorganizationtomeetitsfinancialobligationsi.e.assesswhethertheorganizationhassufficientliquidresources(cash)topayitscreditors.ThecurrentratioistheratioofCurrentAssetstoCurrentLiabilities.20122013Current

assets150230Current

liabilities144220Current

Ratio1.04∶11.05∶1（1）CurrentRatioThequickratio(AcidTestRatio)istheratioofCurrentAssetsexcludingstocktoCurrentLiabilities.Iftheratioistoohigh,thecompanymaybeholdingexcessiveliquidassets.Iftheratioistoolow,thecompanymayhavealiquidityproblem.20122013Currentassetsexcludingstock090160Currentliabilities144220QuickRatio0.63∶10.73∶1（2）

QuickRatio9.10

EfficiencyRatiosThisratioshowsthenumberoftimetheaveragestockisbeingsoldinaperiod.StockTurnover=(1)StockTurnover.Thisratioisusedtoappraisethecompanyperformanceinitsdebtcollectionability.Itisaroughmeasureoftheaveragelengthoftimeittakesforacompanytocollecttradedebtsfromdebtors.Theshorterthecollectionperiodthebetter.（2）

DebtorsCollectionPeriod20122013Debtors90160Sales8001000DebtorCollectionPeriod41days58daysThisratioshowshowlongittakesafirmonaveragetopayitscreditors.20122013Creditors57060

Purchases570710Creditors

Payment

Period37

days31

days（3）CreditorsPaymentPeriod9.11

TheControlofWorkingCapitalAnorganizationwithtoomuchworkingcapitalismakinginefficientuseofitsresourcesthatmaybeexpensivetofinance.Toolittleinvestmentinworkingcapitalcanleadtolostopportunitiesandsevereli-quiditystrain.Overtradingoccurswhenanorganizationcarriesontoomuchbusinessfortheam