Financial Statement Analysis Essay - 2546 Words

For the exclusive use of G. NEVIOUS TB0069 August 9, 2007 Graeme Rankine Financial Statement Analysis— Identify the Industry Since opportunities and constraints tend to be different across industries, companies in different industries tend to make different investment, dividend, and financing decisions. Thus, firms in different industries exhibit different financial characteristics, and, hence, report different financial ratios. For example, â€Å"old economy† businesses with large amounts of tangible assets may have higher leverage ratios. Service or trading firms may have large amounts of intangible assets such as knowledge assets or a large and loyal customer base, and, hence, have low leverage ratios because â€Å"growth options†Ã¢â‚¬ ¦show more content†¦Source: Thomson Banker One-Analytics 1 100.00 79.32 20.68 0.00 19.38 1.30 0.00 0.64 1.67 0.27 (0.09) 0.04 0.00 0.10 0.41 0.35 0.76 2 100.00 11.11 88.89 0.00 20.17 68.72 1.18 (19.23) 18.33 29.98 9.98 0.00 0.00 0.00 20.00 0.00 20.00 3 100.00 36.62 63.38 0.00 39.91 23.47 0.00 1.98 0.99 24.47 7.72 0.00 0.00 0.00 16.75 (1.85) 14.90 4 100.00 49.78 50.22 0.32 25.13 24.77 3.11 (5.09) 0.18 16.39 6.53 0.00 0.00 0.00 9.86 0.00 9.86 5 100.00 52.77 47.23 0.00 14.54 32.69 4.50 1.84 0.00 30.04 4.18 0.07 0.21 (0.21) 25.78 0.21 25.99 Common-Size Income Statement (percentage; averaged over three years) NET SALES COST OF GOODS GROSS PROFIT R D EXPENDITURES SELL GEN ADMIN EXP INC BEF DEP AMORT DEPRECIATION AMORT NON-OPERATING INC INTEREST EXPENSE INCOME BEFORE TAX PROV FOR INC TAXES MINORITY INT (INC) INVEST GAINS/LOSSES OTHER INCOME NET INC BEF EX ITEMS EX ITEMS DISC OPS NET INCOME Exhibit 2 6 100.00 43.81 56.19 14.61 16.01 25.58 0.00 2.15 0.09 27.64 8.12 0.00 0.00 0.00 19.51 0.00 19.51 7 100.00 23.20 76.80 20.01 35.77 21.03 0.00 0.37 0.87 20.52 5.96 0.00 0.00 0.00 14.57 (0.05) 14.52 8 100.00 17.03 82.97 17.18 33.02 32.77 0.00 5.94 0.00 38.71 11.57 0.00 0.00 0.00 27.14 0.00Show MoreRelatedFinancial Statements And Financial Statement Analysis Essay3026 Words   |  13 PagesLITERATURE REVIEW INTRODUCTION Financial statements are usually means of communicating information on a company’s operations. 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(Maheshwari, 1998) Ratio analysis is one of the powerful techniques which are widely used for interpreting financial statements. This technique serves as a