Financial Statements Analysis

1. Joy Kenneth Sala Biasong, D.M., Ed.D., Ph.D.
Resource Person

2.  Financial Statements
Income Statement
Balance Sheet
Cash Flow Statement
Statement of Retained Earnings

3.  Analytical Tools and Techniques
Horizontal Analysis
Formula for Percentage Change
Absolute and Percentage Changes
Development of Trends
Graphical Presentation
(R. Roque)

4.  Vertical Analysis
Conversion Procedures
Comparison with Other Firms’
Financial Statements
(R. Roque)

5.  Ratio Analysis
Tests of Liquidity
Current Ratio
Acid-Test Ratio
Working Capital Activity Ratios
* Receivable Turnover
* Inventory Turnover
Operating Cycle Ratio
Trade Payables Turnover

6.  Tests of Solvency
Times Interest Earned
Debt/Equity Ratio
Debt Ratio
Equity Ratio

7.  Tests of Profitability
Return on Sales
Return on Total Assets
Return on Owner’s Equity
(Proprietor’s/ Partner’s/
Stockholder’s Equity)
Earnings per Share

8.  Market Tests
Dividends Yield
Dividends Payout
Price/ Earnings Ratio
Gross Profit Variance Analysis
4 Way Test
6 Way Test
2 Way Test

9.  Interpretations and Use of Financial
Ratios
Standards
Problems and Limitations

10.  Interpretations and Use of Financial
Ratios
Standards
Problems and Limitations