IENG 215 IENG 215 Financial Analysis Financial Analysis
Jan 13, 2016
IENG 215IENG 215
Financial AnalysisFinancial Analysis
Financial Statement Financial Statement AnalysisAnalysis
Liquidity Measures current ratio quick ratio working capital
Long Term Credit Risk debt to assets ratio debt to equity
Financial Statement Financial Statement AnalysisAnalysis
Profitability Measures return on assets return on equity net profit margin earnings per share
Activity Ratios accounts receivable turnover inventory turnover
LiquidityLiquidity
Working Capital
900,55
400,67300,123
sLiabilitieCurrentAssetsCurrentWC
LiquidityLiquidity Working Capital
Q: Is $55,900 sufficient working capital to cover 2-3 months of expenses?
900,55
400,67300,123
sLiabilitieCurrentAssetsCurrentWC
LiquidityLiquidity
Current Ratio (Industry > 2.0)
83.1
400,67
300,123
sLiabilitieCurrent
AssetsCurrentCR
LiquidityLiquidity
Quick Ratio (Industry > 1.0)
03.1
400,67
200,54300,123
sLiabilitieCurrent
InventoryAssetsCurrentQR
Long Term Credit Long Term Credit RiskRisk
Debt to Assets (Industry < 33%)
50.0
100,387
200,193
AssetsTotal
sLiabilitieTotalDA
Long Term Credit Long Term Credit RiskRisk
Debt to Assets (Industry < 33%)
50.0
100,387
200,193
AssetsTotal
sLiabilitieTotalDA
1996 0.54
Long Term Credit Long Term Credit RiskRisk
Debt to Equity Ratio (Industry 33-50%)
996.0
900,193
200,193
'
EquitysOwner
sLiabilitieTotalDE
Long Term Credit Long Term Credit RiskRisk
Debt to Equity Ratio (Industry 33-50%)
996.0
900,193
200,193
'
EquitysOwner
sLiabilitieTotalDE
1996 1.182
Profitability Profitability MeasuresMeasures
Return on Assets (Industry 8-10%)
047.02
800,383100,387000,18
AssetsAverageTotal
IncomeNetROA
Profitability Profitability MeasuresMeasures
Debt to Equity (Industry 12-15%)
097.0
2/)900,175900,193(
000,18
EquityOwnerAverage
IncomeNetROE
Profitability Profitability MeasuresMeasures
Net Profit Margin (Industry 4-6%)
(Industry Specific)
031.0
800,574
000,18
SalesNet
IncomeNetNPM
Profitability Profitability MeasuresMeasures
Earnings per Share (Industry Specific)
18
000,1
000,18
tan
dingOutsSharesCommon
IncomeNetEPS
Activity RatiosActivity Ratios
Accounts Receivable Turnover (Industry Specific)
ART
46.13
2/)600,38800,46(
800,574
Re
ceivableAccountsAvg
SalesNetART
Activity RatiosActivity Ratios
Inventory Turnover (Industry > 10)
365.8
2/)200,48200,54(
300,428
InventoryAverage
SoldGoodsofCostIT
Financial LeverageFinancial LeverageFirm with No LeverageBalance Sheet Assets $100,000
Liabilities $0 Owner Equity 100,000Total Liability & Owner Equity $100,000
Income from Operations $18,000Interest Expense 0Net Income $18,000
Financial LeverageFinancial LeverageFirm with No LeverageBalance Sheet Assets $100,000
Liabilities $0 Owner Equity 100,000Total Liability & Owner Equity $100,000
Income from Operations $18,000Interest Expense 0Net Income $18,000
18.0000,100
000,18
18.0000,100
000,18
ROE
ROA
Financial LeverageFinancial LeverageFirm with LeverageBalance Sheet Assets $100,000
Liabilities $50,000 Owner Equity 50,000Total Liability & Owner Equity $100,000
Income from Operations $18,000Interest Expense 4,000Net Income $14,000
Financial LeverageFinancial Leverage
28.0000, 50
000,14
14.0000,100
000,14
ROE
ROA
Firm with LeverageBalance Sheet Assets $100,000
Liabilities $50,000 Owner Equity 50,000Total Liability & Owner Equity $100,000
Income from Operations $18,000Interest Expense 4,000Net Income $14,000
Financial LeverageFinancial Leverage
28.0000, 50
000,14
14.0000,100
000,14
ROE
ROA
Firm with LeverageBalance Sheet Assets $100,000
Liabilities $50,000 Owner Equity 50,000Total Liability & Owner Equity $100,000
Income from Operations $18,000Interest Expense 4,000Net Income $14,000
Note: ROI = 18,000/100,000