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