Ratio

FINANCIAL STATEMENT ANALYSIS DANNY S. LITT INTRODUCTION The figures from the mo kaleary rumors by themselves have dinky signifi brush offce by themselves. The relationship on one add to another, the amount and the direction of the change can prove to be informative. Methods of financial Analysis: ? Comparative abridgment The monstrance of comparative financial commands affords an analyst the opportunity to mark off trends and analyze the march on an entity has made over a specified period of time. The coursely financial statement presentation in a corporate annual report usually includes detailed comparative financial statements for the current and preceding year along with a 5or 10-year sum-up of pertinent financial entropy. Trend lucks array several long time financial data in terms of a suitcase year. gross revenue Accounts Receivable 2012 $650,000 70,000 2011 $600,000 52,000 2010 $550,000 44,000 2009 $500,000 40,000 This data in trend percentage form would be: Sales Accounts Receivable 2012 130% clxxv% 2011 120% 130% 2010 cx% 110% 2009 carbon% 100% ? Dollar and percentage abstract Percentage analytic thinking consists of trim down related amounts to a series of percentages of a precondition base.

plain analysis indicates the per capita change in financial statement items over a period of time and is useful in evaluating trends. Vertical analysis (common-size analysis) is the expression of each item on a financial statement in a given period to a base figure and is helpful in detecting trends and in making intercompany comparisons of different size d companies. A end tatter and income state! ment can be converted into common-size statements by dividing the balance sheet items by total assets and income statement items by net sales. HORIZONTAL ANALYSIS Statement of Financial Position celestial latitude 31, 2012 and 2011 (Dollars in thousands) 2012 2011 Current assets: Cash and sellable securities Accounts receivable, net size up Prepaid expenses Total current assets...

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