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Financial Statement Analysis Formulas

The document shows a horizontal analysis of the balance sheet of a company from 2019 to 2020. It compares various asset and liability accounts between the two years and calculates the increase, decrease, and percentage change. The total assets increased from $10.2 million in 2019 to $11.5 million in 2020, while total liabilities and equity decreased from $10.2 million to $9.5 million. Cash and cash equivalents saw the largest percentage increase at 50%, while bonds payable saw the largest percentage decrease at 84%.

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Karl Luzung
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257 views10 pages

Financial Statement Analysis Formulas

The document shows a horizontal analysis of the balance sheet of a company from 2019 to 2020. It compares various asset and liability accounts between the two years and calculates the increase, decrease, and percentage change. The total assets increased from $10.2 million in 2019 to $11.5 million in 2020, while total liabilities and equity decreased from $10.2 million to $9.5 million. Cash and cash equivalents saw the largest percentage increase at 50%, while bonds payable saw the largest percentage decrease at 84%.

Uploaded by

Karl Luzung
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Horizontal Analysis

Assets 2019 2020


Cash and Cash Equivalent 400.00 600.00
Trade and other receivable 2,600.00 2,900.00
Inventories 1,200.00 1,000.00
Long term investments 2,000.00 2,200.00
Property Plant and Equipment 4,000.00 4,400.00
Other Assets - 400.00
Total Assets 10,200.00 11,500.00

Liabilities and Equity


Trade and other payables 3,000.00 3,500.00
bonds payable 2,500.00 400.00
discount on bonds payable - 20.00 - 18.00
ordinary shares 3,100.00 3,200.00
share premium 2,000.00 2,200.00
retained earnings - 380.00 218.00
Total Liab and Equity 10,200.00 9,500.00
Increase/(Decrease)
Peso Percentage
200.00 50% unfavorable Maximization of SH Wealth.
300.00 12% unfavorable Resources CASH CE
- 200.00 -17%
200.00 10%
400.00 10%
400.00 -

-
-
500.00 17%
- 2,100.00 -84%
2.00 -
100.00 3%
200.00 10%
598.00 -

% of Change = Amount of Change / Base Amount


Vertical Analysis
Tab Company Pon Company
Net Sales 200,000.00 100% 3,000.00
Cost of Goods Sold - 160,000.00 -80% - 1,000.00
Gross Profit 40,000.00 20%
Selling and admin expense - 10,000.00 -5% - 500.00
Interest Expense - 3,000.00 -2% - 200.00
Profit Before Income Tax 27,000.00 14% 1,300.00
Income Tax 10,800.00 5% 520.00
Net Income 16,200.00 8% 780.00
Pon Company
100%
-33%

-17%
-7%
43%
17%
26%
Profitability Ratios:

Ratio Formula

Return on Sales (ROS) Profit/Net Sales

Gross Profit Rate Gross Profit/Net Sales

Return on Total Assets (Profit/Interest Expense)/Ave total Assets

Return on Equity Profit/Average Shareholder's Equity

Operating Leverage Contribution Margin/EBIT

Sales
Variable Costs
Contribution Margin

Net income + Tax + Interest = EBIT

Times Preferred dividends earned Profit/Preferred dividends req't


Purpose

Measures profit as a percentage of Sales

Measures gross profit as a percentage of Sales for the recovery of operating expenses

Overall asset profitability

Percentage of income derived for every equity

How many times profit will inc/dec in relation to changes in sales

xx
(xx)
xx

adequacy of current earnings to meet dividend payments


Liquidity Ratios

Asset turnover Net Sales/Ave total assets Measures the effectiveness of a

Current Asset Turnover Net Sales/Ave Current Assets reasonableness of amount of cu

Net working Capital Current assets - current liabilities

Current Ratio Current Assets / Current Liabilities

Quick asset ratio Cash, Receivables, Marketable Securities


(acid test ratio)
Quick Assets/Current Liabilities

Earnings per Share Net income-Preferred Dividends / Ave common shares outstanding
Common Shares
Measures the effectiveness of asset utilization

reasonableness of amount of current asset.

Equity Common owners


Preferred Preferred/priority over the income

mmon shares outstanding


Growth Ratios

Price/Earnings Ratio Market Price per share/Earnings per share

Dividend Yield Ratio Dividend per share/Market Price per share

Dividend Payout Ratio Dividend per share/Earnings per share

Book value per share Shareholder's Equity/Average shares outstanding


Leverage Ratio

Debt to equity ratio Total Liabilities/Net Shareholders Equity

Debt Ratio Total Liabilities/Total Assets

Equity Ratio SHE/Total Assets

Equity Multiplier Total Assets/SHE

Times interest earned ratio EBIT/Interest expense

Financial Leverage ratio EBIT/(EBIT-interest-preferred dividends)

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