Foundations of Ratio

1
Foundations of Ratio Financial Analysis

• Chapter 4

2
Types of Analysis

• Common Size statements
• Ratio Analysis

3
Common-Size Statements

• Horizonal
• Vertical

4
Ratio Analysis

• Why ratio analysis?
• Problems with ratio analysis

5
Types of Ratios

• Activity analysis
• Operating
• Investment
• Liquidity Analysis
• Cash cycle
• Working capital
• Defensive interval

6
Types of Ratios

• Long-Term Debt Solvency
• Covenants
• Debt ratios
• Interest coverage
• Capital expenditure
• CFO/Debt

7
Types of Ratios

• Profitability
• ROS
• ROI
• ROC
• Leverage
• Operating
• Financial

8
Types of Ratios

• Integrated Analyses
• Economic Characteristics Strategies

9
Types of Ratios

• Used in Valuation
• EPS
• Simple Capital Structure
• Complex Capital Structure
• Adjustments
• Limitations
• CFO/Share
• EBITDA/Share
• BV/Share
• Price to earnings
• P/E vs P/Book
• Dividend Payout

10
Ratio Disclosure Use

• Actual vs Perceived
• Disclosure Patterns