Financial Statements Analysis: Ratio, Common-Size, Cash Flow
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Questions and Answers

அடக்குப்பட்ட மதிப்பு வரையறுக்கல் நிலைகளை எப்போது பயன்படுத்தலாம்?

  • விளைவு விகிதம்
  • கடன்-சொத்து விகிதம்
  • உறுதி விகிதம் (correct)
  • லெவல்-சொத்து விகிதம்
  • Cash Flow Analysis என்று என்ன?

  • Balance Sheet-ஐ analyze செய்யு
  • Business-ன் Cash Movement-ஐ analyze செய்வோம் (correct)
  • Profitability ratios-ஐ calculate செ
  • Cash-ஐ Accounting-ஐ match செய்வோம்
  • Common-Size Statements-ல் financial statements- ஐ display செ?

  • Total Assets- ஐ percentage- ஆ display
  • Total Profits- ஐ percentage- ஆ display செ
  • Total Revenue- ஐ percentage- ஆக display செ (correct)
  • Total Liabilities- ஐ percentage- ஆ display
  • Efficiency Ratios-,- Accounts Receivable Turnover Ratio- -?

    <p>Efficiency Ratio</p> Signup and view all the answers

    Debt-to-Equity Ratio- -?

    <p>Solvency Ratio</p> Signup and view all the answers

    'Return on Equity (ROE)' ratio- -?

    <p>'Profitability Ratios' - -</p> Signup and view all the answers

    Study Notes

    Understanding Financial Statements Analysis

    Financial statements analysis is a vital tool for assessing a company's health and future prospects. By analyzing balance sheets, income statements, and cash flow statements, you can evaluate a company's efficiency, effectiveness, and financial strength. In this article, we'll cover three key aspects of financial statements analysis: ratio analysis, common-size statements, and cash flow analysis.

    Ratio Analysis

    Ratio analysis involves comparing one financial statement item to another, often expressed as a percentage. It helps you evaluate a company's performance, liquidity, solvency, profitability, and efficiency. Some popular ratios include:

    • Liquidity ratios: Quick ratio, Current ratio
    • Solvency ratios: Debt-to-equity ratio, Debt-to-assets ratio
    • Profitability ratios: Return on equity (ROE), Gross profit margin, Net profit margin
    • Efficiency ratios: Accounts receivable turnover ratio, Inventory turnover ratio

    Common-Size Statements

    Common-size statements display financial statements as a percentage of a chosen base figure, typically total revenue or sales. This normalization makes it easier to compare a company's performance over time and identify trends or changes in the use of financial resources. Common-size analysis can be applied to balance sheets, income statements, or cash flow statements.

    Cash Flow Analysis

    Cash flow analysis focuses on the movement of cash in and out of a business. It's essential to assess a company's ability to generate and manage cash. Analyzing cash flow ratios, such as the cash conversion cycle, provides insights into a company's ability to generate cash from operations and convert it into assets. It's also important to track the evolution of a company's cash balances over time.

    Conclusion

    By combining ratio analysis, common-size statements, and cash flow analysis, you can develop a comprehensive understanding of a company's financial position. This information is crucial for making informed decisions about investment, lending, or strategic partnerships. Remember that financial statements analysis is a dynamic process that requires you to stay updated with a company's financial performance, industry trends, and relevant economic factors.

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    Description

    Learn about the key aspects of financial statements analysis, including ratio analysis, common-size statements, and cash flow analysis. Understand how these tools can help assess a company's performance, efficiency, and financial strength.

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