the basic principle of financial statement analysis. purpose's analysis, method of financial statement analysis, and technic of financial statement analysis

1. BASIC PRINCIPLE OF FINANCIAL STATEMENT
ANALYSIS
KHOMSATUN (7101413011)
NUR MAIZAH RAHMAWATI (7101413052)

2. Analysis’s purpose
to select, evaluate, interpreting and compare
financial data, along with other pertinent
information, in order to formulate an
assessment of a company’s present and future
financial condition and performance.

3. Method of financial statement analysis
1. Horizontal common-size analysis uses the amounts in
accounts in a specified year as the base, and
subsequent years’ amounts are stated as a percentage
of the base value.
• Useful when comparing growth of different accounts over
time.
2. Vertical common-size analysis uses the aggregate
value in a financial statement for a given year as the
base, and each account’s amount is restated as a
percentage of the aggregate.
• Balance sheet: Aggregate amount is total assets.
• Income statement: Aggregate amount is revenues or sales.

4. 235.829.499.436274.498.609.528
horizontal
5.983.541.214
98.290.268.375
vertical

5. 1. LIQUIDITY
• Liquidity is the ability to satisfy the company’s short-term obligations using
assets that can be most readily converted into cash.

6. SOLVENCY
Solvency is a measure of the long-term financial viability of a business which
means its ability to pay off its long-term obligations such as bank loans, bonds
payable, etc
Total Liability
• Total Debt to Equity Ratio = ------------------ x 100 %.
equity
Total liability
• Total Debt to capital Assets = ------------------- x 100 %.
Total Asset
long term liability
• Long Term Debt to = -------------------------------- x 100 %
Equity Ratio equity

7. Profitability
Profitability is the ability of a business to
earn profit for its owners. While liquidity
ratios and solvency ratios are relationships
that explain the financial position of a
business profitability ratios are relationships
that explain the financial performance of a
business. Key profitability ratios include net
profit margin, gross profit margin, operating
profit margin, return on assets, return on
capital, return on equity, etc.

8. Profitability
Gross profit
• Gross Profit Margin = ---------------------- x 100 %.
Net sales
COGS + adm. expenses
• Operating Ratio = --------------------------------- x 100 %.
Net sales
Net profit after tax
• Net Profit Margin = ---------------------------- x 100 %.
Net sales
Net profit after tax
• Return On Investment = ----------------------------- x 100 %.
total assets

9. ACTIVITY RATIO
Activity ratios explain the level of efficiency
of a business. Key activity ratios include
inventory turnover, days sales in inventory,
accounts receivable turnover, days sales in
receivables, etc.

10. net sales
– Total Assets = ------------------------- x 1 kali.
Turn Over Total assets
sales on credit
– Receivable Turnover = -------------------------- x 1 kali.
receivable
receivable average x 360
– Average Collection = ----------------------------- x 1 hari.
Periode sales on credit

11. cost of good sold
Inventory Turnover = ----------------------------- x 1 kali.
Inventory
Inventory x 360
Average day’s = ----------------------------- x 1 hari.
Inventory cost of goods sold
net sales
Working Capital = ------------------------------------- x 1 kali.
Turnover current assets – current liability

12. Technic of financial statement analysis
Comparing of
financial
statement
Trend
Common size
statement
Cash flow
statement
Working capital
analysis
Ratio analysis
Gross profit
analysis
Break even
analysis

13. Financial statement comparing
analysis
Is an analysis method to compare financial
statement for 2 period or over the period that
shown :
a. Absolut data
b. Fluctuating value in rupiah
c. Fluctuating value in precentage
d. Comparing value in ratio
e. Total of precentage

14. Example: Income Statement PT Telkom
Periode
2011
(Rp)
Periode 2012
(Rp)
Berkurang-
Bertambah
(Rp)
Berkurang-
Bertambah (%)
Income 71.253 77.143
Salary Exp 8.555 9.786
Depreciation Exp 14.863 14.456
Adv. Exp 3.278 3.094
Admin Exp 2.935 3.036
Other Exp 192 1.973
Gross profit 41.430 44.798
Income tax 5.387 5.866
Net profit 36.043 38.932

15. Balance sheet compare
2011(RP) 2012(RP) +/- (RP) +/- (%)
Cash 9.634 13.118 3484 36
acc. Receivable 406 701 295 72
Inventory 758 579 179* 23,6*
Fixed asset 74.897 77.047 2150 2,9
Total aktiva 85.695 91.445 9420 11
Current liability 22.187 24.107 1920 8,6
Long term liab. 19.884 20.284 400 2
Capital 43.624 47.054 7100 16,3
Total pasiva 85.695 91.445 9420 11

16. Analysis…????

17. TREND PERCENTAGE ANALYSIS
calculates the percentage change for one account
over a period of time of two years or more.
• Percentage change
To calculate the percentage change between two
periods:
• Calculate the amount of the increase/(decrease) for
the period by subtracting the earlier year from the
later year. If the difference is negative, the change is a
decrease and if the difference is positive, it is an
increase.
• Divide the change by the earlier year's balance. The
result is the percentage change.

18. Common size statement
A company financial statement that
displays all items as percentages of a common
base figure. This type of financial statement
allows for easy analysis between companies or
between time periods of a company.

19. Working capital analysis
An analysis to determine changes in working
capital is to compare its sources with its uses.
Recall that transactions involving only current
asset and current liability accounts have no
net effect on working capital.

20. Cash flow statement analysis
to determine how a company uses its cash
assets. The choice to use cash to acquire an
asset, to meet a liability, or to retire a debt is a
process of investment and disinvestment, and
a manager always has choices to make, some
smart and some maladroit. It’s important to
keep track of how well a company’s
management is making these choices.

21. Ratio analysis
It's comparing the number against
previous years, other companies, the industry
or even the economy in general. Ratios look at
the relationships between individual values
and relate them to how a company has
performed in the past, and how it might
perform in the future.

22. Gross profit analysis
is designed to pick apart the reasons why
the gross profit margin changes from period to
period, so that management can take steps to
bring the gross margin in line with
expectations. A decline in gross profits can be
an indicator of serious problems, so the figure
is closely watched.

23. Break even analysis
An analysis to determine the point at
which revenue received equals the costs
associated with receiving the revenue. Break-
even analysis calculates what is known as a
margin of safety, the amount that revenues
exceed the break-even point. This is the
amount that revenues can fall while still
staying above the break-even point.