investment tools financial statement analysis financial ratios and earnings per share

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1、八InvestmentTools:FinancialStatementAnalysis:FinancialRatiosandEarningsperShare1:AnalysisofFinancialStatementsa:Calculate,interpret,anddiscusstheusesofmeasuresofacompany'sinternalliquidity,operatingperformance,riskprofile,growthpotential,andexternalli

2、quidity.Measuresofacompany’sinternalliquidityTheseratiosarethe:1.Currentratio=currentassets/currentliabilities.2.Quickratio=[cash+marketablesecurities+receivable]/currentliabilities.3.Cashratio=[cash+marketablesecurities]/currentliabilities.Thecurren

3、t,quick,andcashratiosdifferonlyintheliquidityofthecurrentassetsthattheanalystprojectswillbeusedtopayoffthecurrentliabilities.Otherratiosask:1.Doesthecompanycollectitsreceivablesonatimelybasis?a.Receivablesturnover=sales/averagereceivablesb.Averagerec

4、eivablescollectionperiod=365/receivablesturnover2.Howfastdoesthecompanymoveitsinventorythroughthesystem?a.Inventoryturnover=costofgoodssold/averageinventoryb.Averageinventoryprocessingperiod=365/inventoryturnover3.Doesthecompanypayitscurrentbills?a.P

5、ayablesturnover=costofgoodssold/averageaccountspayableb.Averagepaymentperiod=365/payablesturnoverThecashcycleisthetimeperiodthatexistsfromwhenthefirmpaysoutmoneyforthepurchaseofrawmaterialstowhenitgetsthemoneybackfromthepurchasersofthefirm’sfinishedg

6、oods.Cashconversioncycle=collectionperiod+inventoryperiod-paymentperiod.Example:Receivablesturnover=9,daysreceivablesout(collectionperiod)=41days,inventoryturnover=6,daysinventoryinstock(inventoryperiod)=61days,payablesturnover=11,anddayspayablesout(

7、paymentperiod)=33days.Cashconversioncycle=41days+61days-33days=69days.Measuresofacompany’soperatingperformanceOperatingefficiencyratiosquestionhowefficientlymanagementisusingtheassetstheyhaveattheirdisposal.Efficiencyratiosareallsalestobalancesheetit

8、emratios.·totalassetturnover=sales/totalassets·fixedassetturnover=sales/fixedassets·equityturnover=sales/equityOperatingprofitabilityratioslookathowgoodmanagementisatturningtheireffortsintoprofits.Grossprofitmargin=grossprofits/sales.Operatingprofitm