Financial Statement Analysis

Chapter 1 1-1 Company Valuation 1-1 Why use a valuation technique? 1-2 Who uses valuation techniques? 1-4 Wells Fargo "dividend capitalization" model 1-5 Dividend computation for privately-held corporation 1-7 Review questions 1-9 Chapter 2 2-1 Ratio Analysis: The Effect Ratios 2-1 Effect ratios 2-2 Liquidity 2-3 Inventory to working capital 2-6 Accounts receivables to working capital ratio 2-8 Net sales to working capital (working capital turnover) 2-10 Operating cash flow to current liabilities 2-11 Debt ratios 2-12 Current liabilities to net worth 2-14 Times interest earned 2-15 Net profit to net worth (return on equity) 2-16 Effect ratio summary 2-17 Review questions 2-18 Chapter 3 3-1 Analysis of Profitability Using the DuPont Analysis 3-1 DuPont system 3-2 DuPont system 3-4 Total DuPont system 3-6 Group exercise - Part A 3-7 Group exercise - Part B 3-8 EBITDA analysis 3-9 Earnings quality 3-10 Review questions 3-14 Chapter 4 4-1 Analysis of Financial Statements Using Causal Ratios 4-1 Causal ratios 4-2 Fixed assets to net worth 4-3 How fixed assets affect profit 4-5 Ratios that could be changed by the fixed assets to net worth ratio 4-6 Correction procedures 4-7 Collection period 4-8 Collection period: Example 4-9 Ratios that could be changed by the collection period 4-11 Correction procedures 4-12 Net sales to inventory (inventory turnover) 4-14 Net sales to inventory: Example 4-15 Ratios that could be changed by net sales to inventory 4-17 Correction procedures 4-18 Net sales to net worth 4-19 Trading ratio: Example 4-20 Trading ratio: Example 4-22 Ratios that could be changed by the trading ratio 4-23 Overtrading characteristics 4-24 Correction procedures 4-26 The profit margin 4-27 The profit margin: Example 4-28 Correction procedures 4-29 Miscellaneous assets to net worth 4-30 Correction procedures 4-31 Causal ratio summary 4-32 Review questions 4-33 Chapter 5 5-1 How to Conduct a Financial Statement Analysis 5-1 How to conduct an analysis of financial statements 5-2 Industry and time series analysis 5-3 Sources of industry averages 5-4 Problems with using industry data 5-5 An example of computing industry statistics from risk management associates (formerly Robert Morris) data 5-6 An example of computing industry statistics from Dun and Bradstreet data 5-7 Guidelines to use in applying ratio analysis 5-8 Review questions 5-9 Chapter 6 6-1 Case Studies 6-1 Case study 1: Paper products company 6-2 Case study 2: National west airline 6-4 Case study 3: Firm A 6-7 Case study 4: Store container corporation 6-9 Discussion case 1 6-12 Discussion case 2 6-15 Chapter 7 7-1 Users of Financial Statements 7-1 Ratios examined by banks for short-term loans 7-2 Ratios examined by banks for long-term loans 7-3 Most important financial ratios for commercial loan departments 7-4 Commercial loan departments' ratios appearing most frequently in loan agreements 7-5 Corporate controllers' most significant ratios 7-6 Ratios most often appearing in corporate objectives and their primary measures 7-7 Review questions 7-8 Chapter 8 8-1 Forecasting Sustainable Growth 8-1 Definitions 8-2 Derivation of the sustainable growth model 8-3 The Alabama door company 8-4 Calculation of Alabama door growth rate 8-5 Improving sustainable growth 8-6 Sustainable growth: Available external equity 8-7 Chapter 9 9-1 Forecasting Bankruptcy 9-1 Altman's bankruptcy prediction formula 9-2 Bankruptcy prediction example 9-4 Altman's second model 9-6 Review questions 9-7 Appendix A A-1 Case Problem A-1 Marine Supply Company Balance Sheet A-4 Marine Supply Company Selected Income Figures A-5 Marine Supply Company Selected Financial Ratios A-6 Case Problem Requirements A-7 Glossary Glossary 1 Index Index 1 Solutions Solutions 1 Chapter 1 Solutions 1 Chapter 2 Solutions 4 Chapter 3 Solutions 8 Chapter 4 Solutions 12 Chapter 5 Solutions 20 Chapter 6 Solutions 22 Chapter 7 Solutions 26 Chapter 8 Solutions 27 Chapter 9 Solutions 2