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Foundations of Ratio & Financial Analysis

Chapter 4

Types of Analysis
Common Size statements Ratio Analysis

Common-Size Statements
Horizonal Vertical

Ratio Analysis
Why ratio analysis? Problems with ratio analysis

Types of Ratios
Activity analysis
Operating Investment

Liquidity Analysis
Cash cycle Working capital Defensive interval

Types of Ratios
Long-Term Debt & Solvency
Covenants Debt ratios Interest coverage Capital expenditure CFO/Debt

Types of Ratios
Profitability
ROS ROI ROC

Leverage
Operating Financial

Types of Ratios
Integrated Analyses Economic Characteristics & Strategies

Types of Ratios
Used in Valuation
EPS
Simple Capital Structure Complex Capital Structure Adjustments Limitations

CFO/Share EBITDA/Share BV/Share Price to earnings P/E vs P/Book Dividend Payout

Ratio Disclosure & Use


Actual vs Perceived Disclosure Patterns

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