Slides About Finance Basics

Finance Basics. R Department of Business Administration. Finance. Finance can be. Financial Statement Analysis. The objective is. Financial Statement Analysis (Cont. Short-term solvency Activity Financial Leverage Profitability Value. Short-Term Solvency. Ratios of short-term. Current ratio= Total. Activity. Ratios of activity. Total asset turnover=. Receivables Turnover= Total operating revenues/ Receivables Average collection period= Days in period(365)/ Receivables turnover. The receivables turnover. Inventory Turnover= Cost. Financial Leverage. Financial leverage is. Debt ratio= Total. Debt ratios provide. Interest Coverage= Earnings. Profitability. Profitability ratios measure the extent to which a firm is profitable. Net profit margin=. Profit Margins. In general. Net Return on. One of the. Return on Equity (ROE)= Net income/ Average stockholders’ equity. ROE= Profit margin. One very important. - Market price. - Price-to-earnings (P/E- Dividend Yield= Dividends per share/ Market price per share. - Market-to-book (M/BConclusions. Accounting statements provide important information about the value of the firm. Conclusions (Cont. You should keep.