ANALYSIS OF FINANCIAL STATEMENT

Assessment of the firms past, present and future financial conditions Done to find firms financial strengths and weaknesses (Financial Position, profitability, solvency, liquidity, capability of management) Useful when making projections. Primary Tools: Financial Statements
Comparison of financial ratios to past, industry,

sector and all firms

ANALYSIS OF FINANCIAL STATEMENT

Before you can value a company, you must understand how company operates and its financial characteristics. (Industry specific characteristic, size, life cycle, accounting method)
Product Life Cycle
Products move through 4 life cycles: introduction, growth, maturity,

and decline. Introduction & growth: Product development and promotion high R&D expenses, high advertising and promotion spending, large capital investments Maturity: Competition increases and costs reductions occur Decline: Sales decline and profit opportunities diminish

Sources of company information

Company website / For investors Annual report News articles Specialized publications, collections, and search tools The government (BAPPEPAM, SEC, FDA, EPA, etc.)

Comparing to Other Firms

Published Industry Ratios Robert Morris Associates Annual Statement Studies Dun and Bradstreet Industry Norms & Ratios

Ratios are a tool Like with all tools you must:

Understand its possible uses (arti, kegunaan dan arah penilaian) Ingatlah, Rasio Keuangan bukanlah tujuan, melainkan hanya alat Agar analisis rasio mencapai tujuannya, sebaiknya angkaangka besaran rasio diperbandingkan dari tahun ke tahun. Akan lebih baik lagi jika diperbandingkan juga dengan rasio yang sama dengan perusahaan saingan Dari rasio-rasio keuangan yang banyak ini, sebaiknya dipilih beberapa jenis rasio yang dianggap penting bagi tujuan perusahaan Carilah penyebab penyimpangan dan perkembangan ini dengan menghubungkan antara rasio satu dengan yang lain

Ratio Analysis
There are 4 categories of ratios Liquidity Leverage Asset Use or Efficiency Profitability Market Value ratio

Liquidity Ratios
How well can the firm pay its bills without under stress. A high ratio indicates liquid, but too high may mean the

firm is inefficient.
Issues to consider: How liquid are inventory and receivables? Leverage (Hutang Lancar)

MENGUKUR LIKUIDITAS DENGAN MEMBANDINGKAN: KAS DAN AKTIVA LANCAR YANG HARUS DIUBAH MENJADI UANG KAS PADA TAHUN TERSEBUT. HUTANG (KEWAJIBAN) YANG JATUH TEMPO DAN HARUS DIBAYAR PADA TAHUN ITU

Liquidity Ratios
Current ratio

= times Current Asset / Current liabilities

MENUNJUKKAN SAMPAI SEJAUH MANA TAGIHAN- TAGIHAN JANGKA PENDEK DAN PARA KREDITOR DAPAT DIPENUHI DENGAN AKTIVA YANG DIHARAPKAN ATAU DIKONVERSIKAN MENJADI UANG TUNAI
Quick ratio = .times

(Current assets - inventory) / Current liabilities

Cash ratio = .. times

Cash + Marketable Securities / Current liabilities

Leverage Ratios
Measures the firms long-run ability to meet its obligations. Too high of a ratio could lead to financial distress too low of a ratio could indicate the firm is not utilizing all the benefits of debt.

Issues to consider A firms level of leverage A firms ability to meet interest payments

Leverage
Total debt ratio = %

Total Debt / Total assets x 100%

(MENGUKUR sejauh mana pinjaman (hutang) itu mendanai seluruh asset

perusahaan)
Debt to Equity ratio =

Total Debt / Total equity x 100% Menunjukkan sejauh mana pendanaan dari hutang digunakan, dibandingkan dengan pendanaan ekuitas
Long-term debt ratio =

Long-term Debt x 100% Long term Debt+ Total equity

Times interest earned ratio (TIAR) = ..times

EBIT / Interest MENGUKUR KEMAMPUAN PERUSAHAAN UNTUK MEMBAYAR BEBAN BUNGA TAHUNAN

Asset Use and Efficiency Ratios

How efficiently does the firm use its assets to generate

sales Investigates long-term and current assets.

Issues Is the firm maximizing the spread between receivables and payables - working capital management? Some industries are more asset intensive and some of these ratios will vary by industry. ADALAH RASIO YANG MENGUKUR SEBERAPA EFEKTIF PERUSAHAAN MENGELOLA AKTIVANYA.

Asset Use and Efficiency Ratios

A. RASIO PERPUTARAN PERSEDIAAN (INVENTORY TURNOVER) = Mengukur berapa kali inventori berputar (terjual) selama tahun terkait apakah perusahaan kelebihan persediaan. = PENJUALAN = .... times PERSEDIAAN B. JANGKA WAKTU PENAGIHAN (DAYS SALES OUTSTANDING /DSO) MENUNJUKKAN BERAPA LAMA RATA-RATA JANGKA WAKTU PENERIMAAN HASIL PENJUALAN SEJAK PENJUALAN TERLAKSANA. ___PIUTANG_________ PENJUALAN RATA-RATA/HARI =. days C. RASIO PERPUTARAN AKTIVA TETAP (FIXED ASSETS TURNOVER RATIO) = RASIO PEMANFAATAN AKTIVA TETAP= MENGUKUR SEBERAPA EFISIEN PERUSAHAAN MENGGUNAKAN PABRIK DAN PERALATANNYA _____PENJUALAN__ AKTIVA TETAP BERSIH = ........... times

Asset Use and Efficiency Ratios

D. RASIO PERPUTARAN TOTAL AKTIVA (TOTAL ASSETS TURNOVER RATIO)
Days sales in inventory =

Inventory turnover /Sales

Receivables turnover = Perputaran piutang

Accounts receivable / 365 days

Profitability
These ratios are the bottom line and show

how well the firm is able to control expenses and generate revenue.
They reflect the impact of all other

categories of ratios.

Profitability
Menggambarkan kemampulabaan perusahaan dalam menghasilkan laba secara relative. Relatif dalam hal ini artinya laba tidak diukur dari besarnya secara mutlak, tetapi diperbandingkan dengan unsur- unsur atau tolak ukur lainnya, karena perolehan laba yang besar belum tentu menggambarkan kamampulabaan yang besar juga. Tolok ukur yang dipakai untuk menilai kemampulabaan biasanya adalah: Pendapatan, Dana, dan Modal
Net Profit Margin =

Net Income / Sales x 100% Indicates what portion of sales contribute to the income of a company

Profitability
Return on Assets (ROA) =

Net Income / Total assets x 100% Return On Assets (ROA) adalah suatu indikator untuk melihat seberapa profitable sebuah perusahaan relatif terhadap total asset. ROA memberikan suatu ide seberapa efisien manajemen dalam penggunaan aset aset perusahaan untuk menghasilkan pendapatan
Return on Equity (ROE) =

Net Income / Total equity x 100%

Return On Equity is a ratio that measure the company capability in generate profit from equity gave by shareholder

Return on Investment (ROI)

Laba Bersih Total Investasi x 100%

Market Value
Earning Per Share (EPS)

= Net Income / Shares Outstanding = $/ Rp

it is indicates the rate of growth a companies earnings are growing (on a per share basis)

Price-Earnings Ratio (PE Ratio)

= Price per Share / Earning per Share =.. Times

In general, a high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E. However, the P/E ratio doesn't tell us the whole story by itself. It's usually more useful to compare the P/E ratios of one company to other companies in the same industry, to the market in general or against the company's own historical P/E.

Financial Ratio Analysis Liquidity

Formula
1. Liquidity Ratios Current ratio
Current assets Current liabilities

How Expressed
Decimal

Meaning
A short-term indicator of the companys ability to pay its short-term liabilities from short-term assets; how much of current assets are available to cover each dollar of current liabilities. Measures the companys ability to pay off its short-term obligations from current assets, excluding inventories.

Quick (acid test) ratio

Current assets Inventory Current liabilities

Decimal

Inventory to net working capital

Inventory Current assets Current liabilities

Decimal

A measure of inventory balance; measures the extent to which the cushion of excess current assets over current liabilities may be threatened by unfavorable changes in inventory.
Measures the extent to which the companys capital is in cash or cash equivalents; shows how much of the current obligations can be paid from cash or near-cash assets.

Cash ratio

Cash + Cash equivalents Current liabilities

Decimal

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Financial Ratio Analysis Profitability

Formula
2. Profitability Ratios Net profit margin Gross profit margin
Net profit after taxes Net sales Sales Cost of goods sold Net sales Net profit after taxes Total assets

How Expressed

Meaning
Shows how much after-tax profits are generated by each dollar of sales.
Indicates the total margin available to cover other expenses beyond cost of goods sold, and still yield a profit. Measures the rate of return on the total assets utilized in the company; a measure of managements efficiency, it shows the return on all the assets under its control regardless of source of financing. Measures the rate of return on the book value of shareholders total investment in the company. Shows the after-tax earnings generated for each share of common stock.

Percentage Percentage

Return on investment (ROI)

Percentage

Return on equity (ROE) Earnings per share (EPS)

Net profit after taxes Shareholders equity Net profit after taxes preferred stock dividends Average number of common shares

Percentage

Dollars per share

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Financial Ratio Analysis Activity

Formula
3. Activity Ratios Inventory turnover
Net sales Inventory

How Expressed

Meaning

Decimal

Days of inventory Net working capital turnover Asset turnover

Inventory Cost of goods sold 365 Net sales Net working capital
Sales Total assets Sales Fixed assets Accounts receivable Sales for year 365

Days Decimal Decimal

Fixed asset turnover

Decimal

Average collection period

Days

Annual credit sales Accounts receivable Accounts receivable turnover Accounts payable Accounts payable period Purchases for year 365 Cash Days of cash Net sales for year 365

Decimal Days Days

Measures the number of times that average inventory of finished goods was turned over or sold during a period of time, usually a year. Measures the number of one days worth of inventory that a company has on hand at any given time. Measures how effectively the net working capital is used to generate sales. Measures the utilization of all the companys assets; measures how many sales are generated by each dollar of assets. Measures the utilization of the companys fixed assets (i.e., plant and equipment); measures how many sales are generated by each dollar of fixed assets. Indicates the average length of time in days that a company must wait to collect a sale after making it; may be compared to the credit terms offered by the company to its customers. Indicates the number of times that accounts receivable are cycled during the period (usually a year). Indicates the average length of time in days that the company takes to pay its credit purchases. Indicates the number of days of cash on hand, at present sales levels.

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Financial Ratio Analysis Leverage

Formula
4. Leverage Ratios
Debt to asset ratio
Total debt Total assets

How Expressed

Meaning

Percentage

Measures the extent to which borrowed funds have been used to finance the companys assets. Measures the funds provided by creditors versus the funds provided by owners. Measures the long-term component of capital structure. Indicates the ability of the company to meet its annual interest costs. A measure of the companys ability to meet all of its fixed-charge obligations. Measures the short-term financing portion versus that provided by owners.

Debt to equity ratio

Total debt Shareholders equity Long-term debt Shareholders equity

Percentage

Long-term debt to capital structure

Percentage

Times interest earned Profit before taxes + Interest charges

Interest charges

Decimal

Coverage of fixed charges Current liabilities to equity

Profit before taxes + Interest charges + Lease charges Interest charges + Lease obligations

Decimal

Current liabilities Shareholders equity

Percentage

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Financial Ratio Analysis Other

Formula
5. Other Ratios Price/earning ratio
Market price per share Earnings per share

How Expressed

Meaning

Decimal

Shows the current markets evaluation of a stock, based on its earnings; shows how much the investor is willing to pay for each dollar of earnings.

Dividend payout ratio

Annual dividends per share Annual earnings per share

Percentage

Indicates the percentage of profit that is paid out as dividends.

Dividend yield on common stock

Annual dividends per share Current market price per share

Percentage

Indicates the dividend rate of return to common shareholders at the current market price.

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