Fundamentals of Financial Management, 13e Chapter 6: Financial Statement Analysis Essay Example
Fundamentals of Financial Management, 13e Chapter 6: Financial Statement Analysis
Formulas
Financial Statement Analysis
6.1 Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Liquidity Ratios
Balance Sheet Ratios Liquidity Ratios
Current
Current Assets Current Liabilities
Shows a firm’s ability to cover its current liabilities with its current assets.
6.2 Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Liquidity Ratios
Balance Sheet Ratios Liquidity Ratios
Financial Leverage Ratios
Balance Sheet Ratios Financial Leverage Ratios
AcidAcid-Test (Quick)
Current Assets - Inv Current Liabilities
Debt-toDebt-to-Equity
Total Debt Shareholders’ Equity
Shows a firm’s ability to meet current liabilities with its most liquid assets.
6.3 Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Shows the extent to which the firm is financed by debt.
6.4 Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Financial Leverage Ratios
Balance Sheet Ratios Financial Leverage Ratios
Financial Leverage Ratios
Balance Sheet Ratios Financial Leverage Ratios Shows the relative importance of long-term debt to the long-term financing of the firm.
6.6 Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Debt-to-TotalDebt-to-Total-Assets
Total Debt Total Assets
Total Capitalization
(i.e., LT-Debt + Equity)
Total Debt Total Capitalization
Shows the percentage of the firm’s assets that are supported by debt financing.
6.5 Van Horne and Wachowicz, Fundamentals of Financial Management, 13th
Formulas
Financial Statement Analysis
6.1 Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Liquidity Ratios
Balance Sheet Ratios Liquidity Ratios
Current
Current Assets Current Liabilities
Shows a firm’s ability to cover its current liabilities with its current assets.
6.2 Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Liquidity Ratios
Balance Sheet Ratios Liquidity Ratios
Financial Leverage Ratios
Balance Sheet Ratios Financial Leverage Ratios
AcidAcid-Test (Quick)
Current Assets - Inv Current Liabilities
Debt-toDebt-to-Equity
Total Debt Shareholders’ Equity
Shows a firm’s ability to meet current liabilities with its most liquid assets.
6.3 Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Shows the extent to which the firm is financed by debt.
6.4 Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Financial Leverage Ratios
Balance Sheet Ratios Financial Leverage Ratios
Financial Leverage Ratios
Balance Sheet Ratios Financial Leverage Ratios Shows the relative importance of long-term debt to the long-term financing of the firm.
6.6 Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Debt-to-TotalDebt-to-Total-Assets
Total Debt Total Assets
Total Capitalization
(i.e., LT-Debt + Equity)
Total Debt Total Capitalization
Shows the percentage of the firm’s assets that are supported by debt financing.
6.5 Van Horne and Wachowicz, Fundamentals of Financial Management, 13th