Cheatography
https://cheatography.com
financial analysis purposes
This is a draft cheat sheet. It is a work in progress and is not finished yet.
Income Statement Analysis
Income Statement Analysis
Vertical Analysis |
x / total revenue x 100 |
comparing by benchmark |
Horizontal Analysis |
TY - LY / LY x 100 |
increase or decrease of value year on year |
Profit Margin |
net income / net sales revenue |
EBIT * (1-tax rate) / net sales |
measures profitability, percentage of sales that remains as net income |
Quality of Income |
cash flow from operating activities (NI + dep + change in current assets + change in STL) / net income > 1 |
compares the cash flow earned to net income declared |
Fixed Asset Turnover |
net sales revenue / average (BB+EB/2) net fixed assets (assets-acc. depreciation) |
shows the ability of the firm to use its fixed assets to generate revenue |
measures productivity |
ROE |
net income / average shareholders equity ( CS, RE, TS, APIC) % |
how much are you getting back for the amount investors are giving it to you |
Asset Turnover |
net sales / average assets |
ROA |
profit margin x asset turnover |
EBIT * (1-tax rate) / average assets % |
combines profitability and productivity |
Financial Leverage |
ROE - ROA % |
should be positive (since it indicates that company creates a bigger return than the cost of borrowing |
ROCE Return on Capital Employed |
EBIT * (1-TAX) / capital employed (total assets-STL) or (LTL+Equity) |
creates value when return on capital employed is greater than the expected return on investment |
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Liquidity Analysis
Current Ratio |
current assets / current liabilities (< 1 in hospitality) |
ability of the firm to cover it's short term debts |
Quick Ratio |
cash + cash equiv + receivables / CL |
measures cash available to pay short term debts |
Cash Ratio |
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