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FINANCIAL STATEMENT ANALYSIS

TINANCIAL RA1165

Current Ratio of adequacy of working

(Banker's Rafio) Qu:,r-e-n!Assets prirnary test of liquidittrr
( Worki ng Capital Ratia)
Current t-iabilities

Oqjrkf}s,"Sets
Current Liabilities

T"urnaver N-s**af-dayg*a-a- yea r

I Turnover
I It measure$ the number of times
I
fiecelvab/es Turnover Ns-!._q'_*edi!-Sale_$ receivables are recorded and collected
Average Receivables
clgr:nggep-etqd
____ J_6_o_ days.
It indicates the average number of days
Receivables Turnover
during which the company musi wait
before receivables are collected.

Inventory -- *e-as! _elG_q-ads, Sql.d_._. It measures the number of times that the
I
Ave. Merchandise Inv*ntory inventory is replaced during the period
...
A,el;is; Aqlr: ;il;v;;W;^
t."....." .....--..- .-.-.

I (InventorV Canversion Period) * - -_-30O days

It indi eates the average nurnber of days
during which the company must wait
i Inventory Turnover
1," "- b"vs at1ry)*_ before the inventories are sold.
['
i
----_S_1lgSJr
" {oqy*s |

Raw Materials T'urnaver ess!-sij$s[el:lol"$- u Eei"

Average Raw Material Inventory
t
i
q sl_sf ,Qqsd_s_ MA aU fa c! U re d
Work Process Turnover e
Aweragre-l#or* irProcess Inventory

Finished 6oads Turnover e-sslo-f-Qseds-liald

Average Finished Goods Inventory

Narmal 2perating Cycle Average Age of Inventory + Average Age of Receivables

Trade Paya bl es Tu rnaver .Net ercdi!-eur[hEse$

Average Age af Trade Payables

{ Payable Deferal Period)

Cu r re n t Assefs Tu rnov er
* In some accounting and finance texts, average inventory age ls aiio iatteo as the€";;f ;;iAs
** These exclude depreciation, amortization W;;a.
anrJ other expenses relatecl to long-term assets.

. rrsrs OF SOLVENCY (Solvency refers to the ability of company to pay its debts)
I nese ratios involve lbverage ratios-'l-everage' refers tr: how much of company's resources are financed by
debt gr-ffetffLq.{_Bgsrly,-p.9-th q-l-shjshr-e-qur$_lu9d-pqy$_fltlal_ltt3r€l{t$ alld dividends
It det*rmines the extent to which
I

Timss Jnteresf Earned --*-*-_t&iI

Interest Expense operations cover interest expense.

Total_Ltglrrlrtrelr
Proporticn of assets provided by
Debt-Equity Ratia creditors cornpared to that provided
Total Equity
owners.

Debt Ratia Total l.iahilitres Proportion of total assets provided by

Total Assets creditors

Equity Ratia Ialalfquiqy Proportion of total assets provided

Totaf Assets 0wner5.

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