Financial Statement Analysis 2

Measures a company's ability to pay short-term obligations using current assets. It shows how much liquidity a company has.

A quick ratio is a liquidity measure that shows the company's ability to pay off its short-term liabilities without selling its inventory. It excludes inventory from current assets, giving a more conservative view.

Calculated by dividing net sales by the average accounts receivable over a period.

This ratio calculates the number of days it takes a company to collect its accounts receivable. It provides insight into the collection period of overdue receivables.

This ratio calculates how much a company uses its inventory to generate revenue, indicating how efficiently they manage inventory.

Measures how efficiently a company uses its fixed assets to generate revenue. A higher ratio means the company uses its assets effectively.

Measures how effectively a company uses all of its assets to generate revenue. A higher ratio indicates a company has better asset utilization.

These ratios measure how efficiently a company utilizes its assets to generate revenue and maximize profits. They provide valuable insights into the company's internal operations.

A ratio that measures the relationship between two variables.

The ability of a business to meet its short-term debt obligations using its current assets.

This ratio measures a company's ability to pay its short-term debt obligations using its current assets.

The formula for calculating the Working Capital Ratio (Current Ratio) is dividing current assets by current liabilities.

The Working Capital Ratio (Current Ratio) for Riel Corporation is 1.97:1. This indicates that for every P1 of current liabilities, Riel Corporation has P1.97 of current assets.

The Working Capital Ratio (Current Ratio) is a tool to assess a company's ability to meet its short-term financial obligations. A higher ratio usually signifies better liquidity, while a lower ratio may indicate a higher risk of financial distress.

An indicator of a company's ability to pay its short-term obligations with its quick assets, which include cash, accounts receivable, and marketable securities.

The Quick Ratio (Acid Test Ratio) helps assess a company's ability to meet its short-term obligations without relying on the quick sale of inventory.

The Quick Ratio (Acid Test Ratio) is calculated by dividing quick assets by current liabilities.

A set of rules or guidelines used to compare a company's financial performance to a standard.

This is a standard commonly used to compare a company's financial performance.

Industry standards provide a competitive context for assessing a company's financial health.

Focusing on the performance of successful competitors can provide valuable insights into effective financial strategies.

Comparing to previous periods helps identify trends and track progress.

Analyst's insights from past experience can inform the selection and interpretation of financial ratios.

Measures the average number of days it takes to sell inventory. Calculated by dividing 365 days by the Inventory Turnover Ratio.

A group of ratios that examine how a company manages its debt. It helps assess the risk associated with the company's capital structure and its ability to meet its financial obligations.

A ratio that measures the amount of debt financing used relative to equity financing. It reflects the risk involved in the company's capital structure.

Reflects the proportion of a company's assets financed by debt. It shows the extent to which a company relies on borrowing to fund its operations.

A ratio measuring a company's ability to cover its interest expense with its operating income. It indicates how much the company has left after paying interest on its debt.

Financial metrics that assess business performance in terms of income (profit) relative to revenue, assets, operating costs, or shareholder equity over a specific time frame.

Calculates the ratio of gross profit to net sales. It reflects the company's ability to generate profits from its core operations.

This ratio indicates the profit margin of a company and shows the amount of net income generated for each dollar of sales.

Measures the effectiveness of a company's use of its assets in generating profits.

Indicates the profitability of a company in relation to its shareholder equity. Shows how much profit is generated for each unit of shareholder investment.

A system of analysis which breaks down ROE into its key components such as Profit Margin, Asset Turnover, and Financial Leverage to better understand what drives the overall profitability.

A ratio calculated as Net Income divided by Average Total Assets. It reveals how efficiently a company uses its assets to generate earnings.

A multi-step financial equation that analyzes a company's performance by breaking down ROE into its key components. It helps to understand how factors like profitability, asset utilization, and financial leverage impact the overall ROE.

A component of DuPont analysis that measures how profitable a company is on every dollar of revenue generated. It is calculated by dividing net income by total revenue.

A component of DuPont analysis that measures how effectively a company uses its assets to generate sales. It is calculated by dividing sales revenue by average total assets.

A component of DuPont analysis that measures how much debt a company uses to finance its assets. It is calculated by dividing average total assets by average shareholders' equity.

DuPont Analysis Formula:

The DuPont analysis helps to understand how different parts of a company's operations contribute to its overall profitability. It allows for a more in-depth analysis of its financial health and identifies areas for improvement.