...VERTICAL ANALYSIS Nestlé (Malaysia) Berhad-STATEMENT OF COMPREHENSIVE INCOME | 2012 | (%) | 2013 | (%) | 2014 | (%) | Revenue | 4,556,423 | 100.00 | 4,787,925 | 100.00 | 4,808,933 | 100.00 | | 4,556,423 | | 4,787,925 | | 4,808,933 | | Cost of Sales | 3,003,239 | 65.91 | 3,089,908) | 64.54 | 3,108,981 | 64.65 | | 4,556,423 | | 4,787,925 | | 4,808,933 | | Gross Profit | 1,553,184 | 34.09 | 1,698,017 | 35.46 | 1,699,952 | 35.35 | | 4,556,423 | | 4,787,925 | | 4,808,933 | | Other income | 5,715 | 0.13 | 3,793 | 0.08 | 1,581 | 0.03 | | 4,556,423 | | 4,787,925 | | 4,808,933 | | Sales and distribution expenses | 758,635 | 16.64 | 824,372 | 17.22 | 844,464 | 17.56 | | 4,556,423 | | 4,787,925 | | 4,808,933 | | Administrative expenses | 139,663 | 3.07 | 136,171 | 2.84 | 128,337 | 2.67 | | 4,556,423 | | 4,787,925 | | 4,808,933 | | Other expenses | 3,726 | 0.08 | 6,625 | 0.14 | 3,785 | 0.08 | | 4,556,423 | | 4,787,925 | | 4,808,933 | | Results from operating activities | 656,875 | 14.42 | 734,642 | 15.34 | 724,947 | 15.08 | | 4,556,423 | | 4,787,925 | | 4,808,933 | | Finance income | 929 | 0.02 | 5,947 | 0.12 | 1,650 | 0.03 | | 4,556,423 | | 4,787,925 | | 4,808,933 | | Finance cost | 20,131 | 0.44 | 21,937 | 0.46 | 25,722 | 0.53 | | 4,556,423 | | 4,787,925 | | 4,808,933 | | Net finance cost | 19,202 | 0.42 | 15,990 | 0.33 | 724,947 | 15.08 | | 4,556,423 | |...
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...TREND ANALYSIS AND COMMON SIZE FINANCIAL STATEMENTS Financial statements provide information in assessing the financial health of a company. Basically, these include the Balance Sheet, Income statement, and the Statement of Cash Flows. While a one-year information is important in providing a picture of the company’s current financial condition, several years of financial information could provide a more adequate information on the company’s track record, through a trend analysis. TREND ANALYSIS A trend analysis is important because it would tell whether the company’s financial performance has improved or deteriorated. Unlike a one-year information, making use of several years of financial information and determining the trend would: 1. provide a basis of comparing periodic performances, 2. determine the direction that the company is leading to, and 3. Provide a more adequate basis of determining company’s strengths and weaknesses. COMMON SIZE FINANCIAL STATEMENTS A common size balance sheet expresses each item on the balance sheet as a percentage of total assets. On the other hand, a common size income statement expresses each income statement category as a percentage of net sales (Fraser, 2001). Expressing the items in terms of percentage to total assets (e.g. accounts receivable) would facilitate an analysis of the composition of assets within major categories. Too large percentage of inventories would be alarming because it would indicate that a...
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...Assumptions: Based on the Common Size Income Statement and observation of cost behaviors I: Considered COGS as variable as it directly correlates to the amount of products that we sell. We can also see that COGS to Revenue percentage is almost the same meaning the relationship between is constant, thus the cost is variable. I used the average relationship between the COGS and Revenue for the previous years to project the increase and decrease in revenue. Selling expenses area variable and based of sales, we can deduct if following the logical connection to “sales” and visual connection through the Common Size Income Statement. To calculate it I used the average relationship between the Selling expenses and Revenues. General and Administrative are fixed, and even though in real world environment the company that loses money would probably try to lower the fixed costs by shrinking it’s personnel. Also generally the more the business grows the more general and administrative expenses there would be, because the company would most likely to hire new people in order to accommodate the growth and increase capacity, but I treated it as a fixed cost as I could also observe it’s behavior from the income statement. To calculate it I used an average annual cost. Interest Expense I classified as variable as I observed it’s behavior I also noticed that that rate the interest is growing is 0.02% each successful year, thus I used that rate to calculate the increase in interest during...
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...com/contact-us/ ) Feel Free to Search your Class through Our Product Categories or From Our Search Bar (http://hwguiders.com/ ) Problem P2-12 Debt analysis Springfield Bank is evaluating Creek Enterprises, which has requested a $4,000,000 loan, to assess the firm’s financial leverage and financial risk. On the basis of the debt ratios for Creek, along with the industry averages and Creek’s recent financial statements (on the facing page), evaluate and recommend appropriate action on the loan request. Ratio Definition Calculation Creek Industry Debt 0.73 0.51 Times Interest Earned 3.00 7.30 Fixed Payment Coverage + {[(Principal + Preferred Stock Dividends)] ´ [1¸ (1 – t)]} + {[($800,000 + $100,000)] ´ [1¸ (1 – 0.4)]} 1.19 1.85 Because Creek Enterprises has a much higher degree of indebtedness and much lower ability to service debt than the average firm in the industry, the loan should be rejected Problem P2-13 Common-size statement analysis a common-size income statement for Creek Enterprises’ 2005 operations follows. Using the firm’s 2006 income statement presented in Problem 2–12, develop the 2006 common-size income statement and compare it to the 2005 statement. Which areas require further analysis and investigation? Creek Enterprises Common-Size Income Statement For the Years Ended December 31, 2005 and 2006 2006 2005 Sales Revenue 100.0% 100.0% Less: Cost of goods sold Gross profits...
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...statements consists of using various methods (statistical tools) including comparative statements, schedule of changes in working capital, common size percentages (analysis), fund analysis, trend analysis, and ratio analysis. The purpose of this paper is to review the financial statements of one domestic, and one global organization from the Financial Times 500. The two companies for review are the McDonald’s and Samsung organizations. The data provided in the financial statements will convert into a ratio analysis. Common size analysis, and accounting analysis limitations are tools for review. The pros and cons of each of these statistical tools will also be discussed. To understand the importance of statistical tools, a review of ratio analysis, common size analysis, and accounting analysis limitation will be the starting point for this paper. Ratio Analysis Ratio analysis is the most powerful tool of financial analysis (Accounting for Management, 2012, para. 1) used to evaluate the significance of financial statement data. Ratio analysis is the calculation and comparison of ratios used to monitor and analyze the performance of a firm or organization. Historical trends and of ratios are used to provide important data regarding a company’s financial condition, operations, and ability to attract investors. Pros and Cons of Ratio Analysis The pros...
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...Macy’s, Inc | Macy’s, Inc. Financial Statement Analysis 2011 | Alisa Hitchman | 11/6/2012 | RMA INDUSTRY NUMBERS FOR RETAIL DEPARTMENT STORES Liquidity Analysis BEST AVERAGE WORST Current Ratio 4.6 2.6 1.5 Average Collection Period 0 1 7 Day’s Inventory on Hand 36 107 136 Asset Analysis Fixed Asset Turnover 88.4 13.6 3.5 Total Asset Turnover 3.7 2.3 1.3 Debt Analysis Debt/Worth Ratio 0.4 1.4 3.9 TIE Ratio 8.3 3.1 1.3 Day’s Payable 8 31 42 Profitability Analysis PRE TAX Profit Margin NA 10.7 NA PRE TAX ROE 38.7 14.3 5.9 PRE TAX ROA 18.1 4.6 3.0 Introduction Macy’s, Inc. is a chain of department stores in the U.S. that has 800 locations along with online operations at macys.com. Established in 1858, they are proud to offer the best assortment of brands for a great value to each and every individual while providing engaging customer service. Macy’s wants shopping to be a whole new experience for people and that’s exactly the purpose of the American classics they have created, such as the Macy’s Thanksgiving Day Parade. Macy’s provides the magic to their customers by providing them with brands exclusive to the store, offering everyone the ability to be a trend-setter. Fashion has been brought to new levels thanks to this department store brand, through the web, stores, and mobile devices Macy’s is able to provide the best advice to their customers in need. More importantly...
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...Presentation On Analysis of Financial Statements. Prepared By: Md. Nazmul Hasan. Analysis of Financial Statements What is Financial Statement Analysis: Financial Statements Analysis is an Analysis of the Following Statements: Income Statement Balance Sheet Statement of Owners Equity and Statement of Cash Flow Purpose of Analysis Financial statement analysis helps users make better decisions. Internal Users Managers Officers External Users Shareholders Lenders Customers Financial Statements Are Designed for Analysis Classified Financial Statements Items with certain characteristics are grouped together. Comparative Financial Statements Amounts from several years appear side by side. Consolidated Financial Statements Information for the parent and subsidiary are presented. Results in standardized, meaningful subtotals. Helps identify significant changes and trends. Presented as if the two companies are a single business unit. Tools of Analysis: Dollar & Percentage Changes Component Percentages Trend Percentages Ratios Dollar and Percentage Changes or Horizontal Analysis Dollar Change: Dollar Change = Analysis Period Amount – Base Period Amount Percentage Change: % Percent Change = Dollar Change ÷ Base Period Amount Dollar and Percentage Changes or Horizontal Analysis ABC, Inc. Comparative Balance Sheets December 31, 2005 Assets Current assets: Cash and equivalents Accounts receivable...
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... D’Ainsley Smith FIN/711 January 11, 2014 Professor Allen Research Proposal Financial analysis is important for every organization. In the course of financial analysis, it is determines the areas which are to improved by it. Two organizations selected here are Bank of America and HSBC. Both organizations are in the banking sector and have operations in various parts of the world. The organizations work for the purpose of making sure they achieve their targets. The study is conducted for finding out whether these organizations are working appropriately. Background The organization considered presently is Bank of America. This organization is a banking company and engaged in carrying out various kinds of banking operations for customers. “The organization has a total of 57 million clients at the present time” (Carroll, 2007). There are various banking operations carried out by Bank of America. Operations carried out by Bank of America include acceptance of deposits, lending to individuals and businesses, and various financial operations. This organization has been working towards achievement of target goals. For this organization, it is also important to ensure they provide a detailed financial analysis of the company’s operations. The assistance of the financial analysis ensures the company understands and knows their financial position is in order. The organization determines if they are able to meet financial obligations...
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...FINANCIAL MANAGEMENT Financial Statement Analysis The process of determining financial strengths and weaknesses of a firm by establishing strategic relationship between the items of the balance sheet, profit and loss account and other operative data. Financial Statement Analysis Metcalf and Titard:It is a process of evaluating the relationship between component parts of a financial statement to obtain a better under standing of a firm’s position and performance. Financial Statement Analysis Purpose:To diagnose the information contained in financial statements so as to judge the profitability and financial soundness of the firm. Types of Financial Analysis On the basis of: The materials used. The modus operandi of analysis – i.e., the method of operation followed in the analysis. Types of Financial Analysis On the basis of materials used: External analysis. Internal analysis. Types of Financial Analysis On the basis of materials used: External analysis. • This analysis is done by outsiders who do not have access to the detailed internal accounting records of the business firm. (Investors, creditors, government agencies, credit agencies and general public.) Types of Financial Analysis On the basis of materials used: Internal analysis. • This analysis is conducted by persons who have access to the internal accounting records of a business firm. (Executives and employees of the organization and government agencies which have statutory powers...
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...Definition of 'Financial Statement Analysis' Financial statement analysis (or financial analysis) is the process of understanding the risk and profitability of a firm (business, sub-business or project) through analysis of reported financial information, by using different accounting tools and techniques. Financial statement analysis is an evaluative method of determining the past, current and projected performance of a company. Several techniques are commonly used as part of financial statement analysis including horizontal analysis, which compares two or more years of financial data in both dollar and percentage form; vertical analysis, where each category of accounts on the balance sheet is shown as a percentage of the total account; and ratio analysis, which calculates statistical relationships between data. Objectives of Financial Statement Analysis The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions (IASB Framework). The major objectives of financial statement analysis are as follows 1. Assessment of Past Performance:Past performance is a good indicator of future performance. Investors or creditors are interested in the trend of past sales, cost of goods sold, operating expenses, net income, cash flows and return on investment. These trends offer a means for judging management's past performance...
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...Financial Statement 1 Financial Statement Analysis YOUR NAME Axia College of University of Phoenix Financial Statement 2 Financial statements are often t he life line of a company. These statements show a company manager how viable the organization is and how profitable it has been. If this financial statement is not interpreted right it could cause the reader to make some serious mistakes when making the firm’s financial decisions. Financial statements provide an overview of the businesses financial conditions. There are four basic types of financial statements. The first is the balance sheet which reports a company’s assets, liabilities and net equity for a certain period. An income statement also known as profit and loss statement reports the company’s income, expenses and profits. The retained earning statement explains the changes in a companies retained earnings over a period. A cash flow statement shows the companies cash flow activities. These figures come from the companies operating, investing and financial activities. To sum things up these statements shows a company where there money has gone and profitable they have been. They shown an overall risk-return profile and if the mix of debt and equity financing is profitable. Lenders such as banks or bond buyers are interested in financial statements because through them they can determine if their interest and principles Financial Statement 3 can...
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...Financial Statements Analysis - An Introduction MODULE - 6A Analysis of Financial Statements 27 FINANCIAL STATEMENTS ANALYSIS - AN INTRODUCTION You have already learnt about the preparation of financial statements i.e. Balance Sheet and Trading and Profit and Loss Account in the module titled ‘Financial Statements of Profit and Not for Profit Organisations’. After preparation of the financial statements, one may be interested in analysing the financial statements with the help of different tools such as comparative statement, common size statement, ratio analysis, trend analysis, fund flow analysis, cash flow analysis, etc. In this process a meaningful relationship is established between two or more accounting figures for comparision. In this lesson you will learn about analysing the financial statements by using comparative statement, common size statement and trend analysis. Notes OBJECTIVES After studying this lesson, you will be able to : explain the meaning, need and purpose of financial statement analysis; identify the parties interested in analysis of financial statements; explain the various techniques and tools of analysis of financial statements. 27.1 FINANCIAL STATEMENTS ANALYSIS (MEANING, PURPOSE AND PARTIES INTERESTED) We know business is mainly concerned with the financial activities. In order to ascertain the financial status of the business every enterprise prepares certain statements, known as financial statements. Financial statements are mainly prepared...
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...BUS 310 WK 4 ASSIGNMENT 1 ORGANIZATIONAL ANALYSIS To purchase this visit here: http://www.activitymode.com/product/bus-310-wk-4-assignment-1-organizational-analysis/ Contact us at: SUPPORT@ACTIVITYMODE.COM BUS 310 WK 4 ASSIGNMENT 1 ORGANIZATIONAL ANALYSIS BUS 310 WK 4 Assignment 1 - Organizational Analysis Select an organization (be sure to have your instructor’s approval by Week 3 before starting this assignment) in which you are familiar, if only as a regutar patron. Write a six to eight (6-8) page paper in which you: 1. Describe the organization, what it does, the customers it serves, and its size. 2. Research the organization’s mission statement. Discuss the role HR will play (or does play) in fostering the organization’s mission statement. 3. Assess the common HR challenges facing this organization (e.g., high turn-over, low wages, lack of skilled workers, etc.).... More Details hidden... 1. Activity mode aims to provide quality study notes and tutorials to the students of BUS 310 WK 4 Assignment 1 Organizational Analysis in order to ace their studies. BUS 310 WK 4 ASSIGNMENT 1 ORGANIZATIONAL ANALYSIS To purchase this visit here: http://www.activitymode.com/product/bus-310-wk-4-assignment-1-organizational-analysis/ Contact us at: SUPPORT@ACTIVITYMODE.COM BUS 310 WK 4 ASSIGNMENT 1 ORGANIZATIONAL ANALYSIS BUS 310 WK 4 Assignment 1 - Organizational Analysis Select an organization (be sure to have your instructor’s approval by Week 3 before...
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...Management 2. Basic Tools of Financial Analysis: Accounting Statements and Ratio Analysis 2.1. The Balance Sheet 2.2. The Income Statement 2.3. Cash Flow 2.4. Ratio Analysis 2.5. The Du Pont Identity 2.6. Using Financial Statement Information 2 COURSE CONTENTS 3. Financial Equilibrium 3.1. Current Asset Management 3.2. Short Term Financing 3.3. Working Capital Management 4. Financial Forecasting 4.1. Pro Forma Statements and Financial Planning 4.2. Cash Flow Forecasts 4.3. Cash Budgets 4.4. Cost of Capital 4.5. Capital Structure 4.6. Financial Planning 3 COURSE CONTENTS 5. Identification of Financial markets 5.1. Money Market 5.2. Capital Market 5.3. Foreign Exchange Market 5.4. Derivatives Market 6. Management of stocks, bonds, derivatives and other assets 6.1. Potfolio Theory and Asset Pricing 6.2. Common Stock Analysis and Equity Pricing Models 6.3. Fixed Income Analysis and Bond Pricing 6.4. Futures, Options and Other Derivatives 4 COURSE CONTENTS 7. Foreign exchange markets, currency derivative markets and Euromarkets 7.1. Function and structure of foreign exchange markets 7.2. Forecasting foreign exchange rates 7.3. Currency Futures and Options Markets 7.4. Eurodollar Interest Rate Futures Contracts 7.5. International Money Markets 7.6. Fixed Income Analysis and Bond Pricing 7.7. Futures, Options and Other Derivatives 8. Risk analysis and management 8.1. Exchange Rate risk management 8.2. Country risk analysis 5 COURSE CONTENTS 9. Investment...
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...FINANCIAL ANALYTICAL TOOLS Financial analysis involves evaluating the current financial statements of an organization in order to access the current profitability and also compare same with past performance (time series analysis) and the performance of other players within the industry. In other words, analyzing the financial statements assesses the financial health of a company. The major statistical tools used in financial analysis are ; • Ratio Analysis • Cash Flow Analysis • Common Size Analysis Ratio Analysis Investopedia describes ratio analysis as , ‘A tool used by individuals to conduct a quantitative analysis of information in a company's financial statements’. Ratio Analysis can be viewed along the following lines; • Liquidity Ratios • Profitability ratios • Debt ratios • Operating performance ratios • Cash flow indicator ratios • Investment Valuation ratios In reviewing the liquidity ratios, the current ratio, also known as working capital ratio, is used to calculate the proportion of current assets that is available to cover current liabilities, the formula can be calculated as Current Ratio = Current Assets Current Liabilities Its limitation however rests in the fact that in assessing liquidity, it assumes all the company’s assets will be liquidated to cover this and no indication has been given to the amount of time required to liquidate these current considering an organization is a going concern and as such the key to liquidity...
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