ANALYSIS OF FINANCIAL
STATEMENT
ANALYSIS OF FINANCIAL STATEMENT
Assessment of the firm’s past, present and future financial
conditions
Done to find firm’s financial strengths and weaknesses
(Financial Position, profitability, solvency, liquidity,
capability of management)
Useful when making projections.
Primary Tools:
Financial Statements
Comparison of financial ratios to past, industry, sector
and all firms
ANALYSIS OF FINANCIAL STATEMENT
Before you can value a company, you must
understand how company operates and its financial
characteristics. (Industry specific characteristic, size,
life cycle)
Product Life Cycle
Products move through 4 life cycles: introduction, growth, maturity, and
decline.
Introduction & growth: Product development and promotion – high R&D
expenses, high advertising and promotion spending, large capital
investments
Maturity: Competition increases and costs reductions occur –
Decline: Sales decline and profit opportunities diminish
Sources of company information
Company website / For investors
Annual report
News articles
Specialized publications, collections, and search tools
The government (BEI, SEC, etc.)
Comparing to Other Firms
Published Industry Ratios
Risk Management Association (RMA) previously Robert
Morris Associates – Annual Statement Studies
Dun and Bradstreet – Industry Norms & Ratios
Ratios are a tool – Like with all tools you must:
Understand its possible uses (arti, kegunaan dan arah
penilaian)
Financial Ratios are not company goal!!
Agar analisis rasio mencapai tujuannya, sebaiknya angka-
angka besaran rasio diperbandingkan dari tahun ke tahun.
Akan lebih baik lagi jika diperbandingkan juga dengan rasio
yang sama dengan perusahaan saingan (analisis kelompok
sejenis)
Dari rasio-rasio keuangan yang banyak ini, sebaiknya dipilih
beberapa jenis rasio yang dianggap penting bagi tujuan
perusahaan
Ratio Analysis
There are 5 categories of ratios
Liquidity
Leverage
Activity
Profitability
Market Value ratio
1. Liquidity Ratios
How well can the firm pay its bills without under
stress.
A high ratio indicates liquid, but too high may mean
the firm is inefficient.
Issues to consider:
How liquid are inventory and receivables?
Current Liabilities
Liquidity Ratios
Current ratio = …… times
Current Asset / Current liabilities
MENUNJUKKAN SAMPAI SEJAUH MANA TAGIHAN- TAGIHAN JANGKA
PENDEK DAN PARA KREDITOR DAPAT DIPENUHI DENGAN AKTIVA
YANG DIHARAPKAN ATAU DIKONVERSIKAN MENJADI UANG TUNAI
Quick ratio = ……….times
(Current assets - inventory) / Current liabilities
Cash ratio = ……….. times
(Cash + Marketable Securities) / Current liabilities
2. Leverage Ratios
Measures the firms long-run ability to meet its
obligations.
Too high of a ratio could lead to financial distress
– too low of a ratio could indicate the firm is not
utilizing all the benefits of debt.
Issues to consider
A firm’s level of leverage
A firm’s ability to meet interest payments
Leverage
Total debt ratio = ……………%
Total Debt / Total assets x 100%
(MENGUKUR sejauh mana pinjaman (hutang) itu mendanai seluruh asset
perusahaan)
Debt to Equity ratio =
Total Debt / Total equity x 100%
Menunjukkan sejauh mana pendanaan dari hutang digunakan, dibandingkan
dengan pendanaan ekuitas
Long-term debt ratio =
Long-term Debt x 100%
Long term Debt+ Total equity
Times interest earned ratio (TIER) = …………..times
EBIT / Interest
MENGUKUR KEMAMPUAN PERUSAHAAN UNTUK MEMBAYAR BEBAN
BUNGA TAHUNAN
3. Activity Ratios
How efficiently does the firm use its assets to generate
sales
Investigates long-term and current assets.
Issues
Is the firm maximizing the spread between receivables
and payables - working capital management?
Some industries are more asset intensive and some of
these ratios will vary by industry.
HOW Effective the company managed its ASSETS
Activity Ratios
A. RASIO PERPUTARAN PERSEDIAAN (INVENTORY TURNOVER)
= Mengukur berapa kali inventori berputar (terjual) selama tahun terkait
– apakah perusahaan kelebihan persediaan.
= PENJUALAN = .... times
PERSEDIAAN
B. JANGKA WAKTU PENAGIHAN (DAYS SALES OUTSTANDING /DSO)
MENUNJUKKAN BERAPA LAMA RATA-RATA JANGKA WAKTU
PENERIMAAN HASIL PENJUALAN SEJAK PENJUALAN TERLAKSANA.
___PIUTANG_________
PENJUALAN RATA-RATA/HARI =……. days
C. RASIO PERPUTARAN AKTIVA TETAP (FIXED ASSETS TURNOVER
RATIO)
= RASIO PEMANFAATAN AKTIVA TETAP= MENGUKUR SEBERAPA
EFISIEN PERUSAHAAN MENGGUNAKAN PABRIK DAN PERALATANNYA
_____PENJUALAN__
AKTIVA TETAP BERSIH = ........... times
Activity Ratios
D. RASIO PERPUTARAN TOTAL AKTIVA (TOTAL ASSETS
TURNOVER RATIO)
Days’ sales in inventory =
Inventory turnover /Sales
Receivables turnover = Perputaran piutang
Accounts receivable / 365 days
4. Profitability
These ratios are the bottom line and show
how well the firm is able to control expenses
and generate revenue.
They reflect the impact of all other categories
of ratios.
Profitability
Profitability Ratios are a class of financial metrics that used to
asses a business ability to generate earnings compared to its
expenses in specific perod of time
(Menggambarkan kemampulabaan perusahaan dalam
menghasilkan laba secara relative)
Gross Profit Margin =
Gross Profit / Sales x 100%
Net Profit Margin =
Net Income / Sales x 100%
Indicates what portion of sales contribute to the income
of a company
Profitability
Return on Assets (ROA) =
Net Income / Total assets x 100%
Return On Asset is a ratio that measure the company capability in
generate profit from Asset used.
(ROA memberikan suatu ide seberapa efisien manajemen dalam
penggunaan aset – aset perusahaan untuk menghasilkan
pendapatan)
Return on Equity (ROE) =
Net Income / Total equity x 100%
Return On Equity is a ratio that measure the company capability in
generate profit from equity gave by shareholder
Return on Investment (ROI)
Laba Bersih
Total Investasi x 100%
5. Market Value
Earning Per Share (EPS)
= Net Income / Shares Outstanding = $/ Rp………
it is indicates the rate of growth a companies earnings are
growing (on a per share basis)
Price-Earnings Ratio (PE Ratio)
= Price per Share / Earning per Share =….. Times
In general, a high P/E suggests that investors are expecting higher
earnings growth in the future compared to companies with a lower
P/E. However, the P/E ratio doesn't tell us the whole story by itself. It's
usually more useful to compare the P/E ratios of one company to other
companies in the same industry, to the market in general or against the
company's own historical P/E.
Financial Ratio Analysis — Liquidity
How
Formula Expressed Meaning
1. Liquidity Ratios Current assets A short-term indicator of the company’s
Decimal ability to pay its short-term liabilities from
Current ratio Current liabilities
short-term assets; how much of current
assets are available to cover each dollar
of current liabilities.
Measures the company’s ability to pay
Current assets – Inventory Decimal off its short-term obligations from current
Quick (acid test) ratio assets, excluding inventories.
Current liabilities
A measure of inventory balance;
Decimal measures the extent to which the
Inventory to net Inventory cushion of excess current assets over
working capital Current assets – Current liabilities current liabilities may be threatened by
unfavorable changes in inventory.
Measures the extent to which the
Decimal company’s capital is in cash or cash
Cash ratio Cash + Cash equivalents
equivalents; shows how much of the
Current liabilities current obligations can be paid from
cash or near-cash assets.
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Financial Ratio Analysis —
Profitability
How
Formula Expressed Meaning
2. Profitability Ratios
Net profit after taxes Shows how much after-tax profits are
Net profit margin Net sales Percentage generated by each dollar of sales.
Indicates the total margin available to
Gross profit margin Sales – Cost of goods sold Percentage cover other expenses beyond cost of
Net sales goods sold, and still yield a profit.
Net profit after taxes Measures the rate of return on the total
Return on investment Percentage assets utilized in the company; a
Total assets
(ROI) measure of management’s efficiency, it
shows the return on all the assets under
its control regardless of source of
financing.
Measures the rate of return on the book
Return on equity Net profit after taxes Percentage value of shareholders’ total investment in
(ROE) Shareholders’ equity the company.
Shows the after-tax earnings generated
Earnings per share Net profit after taxes –
Dollars per for each share of common stock.
(EPS) preferred stock dividends
share
Average number of
common shares
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Financial Ratio Analysis — Activity
How
Formula Expressed Meaning
3. Activity Ratios
Inventory turnover Net sales Measures the number of times that average inventory of
———————
Inventory Decimal finished goods was turned over or sold during a period of
time, usually a year.
Inventory Measures the number of one day’s worth of inventory that a
Days of inventory ———————————
Cost of goods sold ÷ 365 Days company has on hand at any given time.
Net working capital Net sales Measures how effectively the net working capital is used to
————————— Decimal generate sales.
turnover Net working capital
Asset turnover Measures the utilization of all the company’s assets;
Sales Decimal measures how many sales are generated by each dollar of
—————————
Total assets assets.
Fixed asset turnover Measures the utilization of the company’s fixed assets (i.e.,
Sales Decimal
——————— plant and equipment); measures how many sales are
Fixed assets generated by each dollar of fixed assets.
Average collection Indicates the average length of time in days that a company
Accounts receivable Days must wait to collect a sale after making it; may be compared
period —————————
Sales for year ÷ 365 to the credit terms offered by the company to its customers.
Indicates the number of times that accounts receivable are
Annual credit sales cycled during the period (usually a year).
Accounts receivable —————————
turnover Accounts receivable Decimal Indicates the average length of time in days that the
Accounts payable period Accounts payable company takes to pay its credit purchases.
———————————— Days Indicates the number of days of cash on hand, at present
Days of cash Purchases for year ÷ 365
sales levels.
Cash Days
———————————
Net sales for year ÷ 365
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Financial Ratio Analysis — Leverage
How
Formula Expressed Meaning
4. Leverage Ratios
Debt to asset ratio Total debt Measures the extent to which borrowed
Percentage
Total assets funds have been used to finance the
company’s assets.
Debt to equity ratio Total debt Percentage Measures the funds provided by creditors
versus the funds provided by owners.
Shareholders’ equity
Long-term debt to Long-term debt Percentage Measures the long-term component of
capital structure capital structure.
Shareholders’ equity
Times interest earned Decimal Indicates the ability of the company to meet
Profit before taxes + Interest charges
its annual interest costs.
Interest charges
Coverage of fixed
Profit before taxes + A measure of the company’s ability to meet
charges Decimal
Interest charges + Lease charges all of its fixed-charge obligations.
Interest charges + Lease obligations
Current liabilities to
equity Current liabilities Percentage Measures the short-term financing portion
versus that provided by owners.
Shareholders’ equity
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Financial Ratio Analysis — Other
How
Formula Expressed Meaning
5. Other Ratios
Market price per share
Price/earning ratio Earnings per share Decimal Shows the current market’s evaluation of
a stock, based on its earnings; shows
how much the investor is willing to pay
for each dollar of earnings.
Dividend payout ratio Annual dividends per share Percentage Indicates the percentage of profit that is
Annual earnings per share paid out as dividends.
Dividend yield on Annual dividends per share Percentage Indicates the dividend rate of return to
common stock Current market price per share common shareholders at the current
market price.
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