Balance Sheet Cash Acct receivable Inventory Total current assets Land pland, equipment Other assets Total long-term assets Total assets Accounts payable Current portion of LT debt Total current liabililties Long-term debt Shareholder' equity Total liabilities and equtiy

2,000 Liquidity Current Ratio Cash Ratio Asset Management Inventory Turnover in Days A/R Turnover in Days

2,001 1.3670 0.1889 83.9266 57.0141

2,002 1.4769 0.1969 58.4500 33.5667

2,003 1.6353 0.3102 52.8357 39.1712

2,004 1.3329 0.2486 40.8260 40.4881

A/P Turnover in Days Cash Conversion Cycle Fixed Assets Turnover Total Asset Turnover Long Term Debt Paying Ability Debt Ratio Times Interest Earned Profitability Gross Margin Operating Profit Margin Net Profit Margin ROA ROE

...Irrational Ratios
1 of 5
http://www.journalofaccountancy.com/Issues/2001/Aug/IrrationalRatios...
FRAUD
The numbers raise a red flag.
BY JOSEPH T. WELLS
AUGUST 2001
inancial statements tell a story,” says accounting professor W. Steve Albrecht, “and the story should make sense.” If not,
it’s possible the story is a fake. By standing far enough back from the numbers to get a good picture of the client’s business,
auditors frequently can detect signs of financial statement frauds. Because the balance sheet, income statement and statement of
cash flows are interrelated, such frauds can pop out when certain numbers don’t make sense. The inescapable logic of the
accounting equation ensures that any major overstatement of assets or profits, such as in the infamous ZZZZ Best case, will show
up over time.
Days’ Sales in Receivables Index
This sales index (or ratio) measures whether receivables and revenues are in or out of balance in two consecutive reporting
periods. A material increase in the index could indicate a company’s receivables are phony. Professor Messod D. Beneish
determined that companies that had not manipulated sales had a mean index of 1.031; companies that had manipulated sales
had a mean index of 1.465, a 42% increase.
Riding in the back of a taxi from the Federal Correctional Institute in Englewood, Colorado, to the Denver airport, I held a
videotape in my hand. Two hours earlier, I had recorded the...

...-------------------------------------------------
Assignment 2012/2013 – Semester 2
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B. Com (Major in Banking and Finance) – Year III
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Ratio Analysis Report
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Student: Kevin Galea 205891 (M)
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Lecturer: Dr. Emanuel Camilleri
Introduction
The purpose of the following report is to aid Build-It Ltd in planning the direction that the company may want to go over the next few years. The report entails a financial analysis which will give the directors an understanding of how well the company is performing.
Figures were obtained from comparative balance sheets and profit and loss statements from the last two years. This information enabled the development of percentage and ratio analysis (see appendices), which was then used to create the report.
Profitability Ratios Analysis
Profitability refers to the ability to make profit from the company’s business activities. It shows how efficiently the management can make profit by using all the resources available.
A very important ratio is the Return on Capital Employed (ROCE). This shows the profit made in relation to the resources employed. Build-It Ltd’s ROCE ratios for 2011 and 2012 were calculated as 22.12% and 25.64% respectively. This increase in...

...Ratio Analysis Memo
July 9, 2012
Memo To:
From:
Date: July 9, 2012
RE: Kudler Fine Foods ratio analysis
One of the things that we will be going over is some of the ratios for Kudler Fine Foods through Liquidity, Profitability, and solvency ratios. We will look into some of the finding that were found through these ratios and discuss them. One of the things that we found was where Kudler Fine Foods’ position is with these ratios. The first area that we look at is profitability.
Profitability Ratios:
When looking through the profits of the company through the balance sheets we will look at a couple of areas. The first area that we will look into is the asset turnover of the company. The beginning assets started in at $1,971,000. When you take that by the total assets of $2,675,250 you get the turnover margin which is 4.04.
Net Sales___ = Asset Turnover $10,796,200 = 4.04
Total Assets $2,675,250
Next area we see is the profit margin. You see through the balance sheet that Kudler Fine foods over the board did pretty good when you look at it from a profit stand point. The way we calculated the profit margin was Net Income over sales and this was the information that we got:
Net Income = Profit Margin $668,950__ = .06
Net Sales $10,796,200
Looking into the return on assets it was interesting to...

...Ratio Analysis
Ratio analysis is basically used to understanding the financial health of a business entity. With the help of ratios we can easily calculate from current year performance of the companies and are then compared to previous years. Ratio analysis conducts a quantitative analysis of information in a company’s financial statements. These Ratios are most commonly used in banking sector can be divided into five main categories
Liquidity Ratios
Leverage Ratios
Profitability Ratios
Activity Ratios
Market Ratios
A) Liquidity Ratios
Liquidity Ratios are used to determine a company's ability to meet its short terms obligations.
These include;
1) Current Ratio
2) Acid Test Ratio
3) Working capital
Current Ratio
What Does Current Ratio Mean?
A liquidity ratio that measures a company's ability to pay short-term obligations. Also known as "liquidity ratio", "cash asset ratio" and "cash ratio".
OR
It is a measure of general liquidity and is most widely used to make the analysis for short term financial position or liquidity of a firm. It is calculated by dividing the total of the current assets by total of the current liabilities.
Formula = Current Assets / Current Liabilities...

...Financial ratio analysis
A reading prepared by Pamela Peterson Drake
OUTLINE
1.
2.
3.
4.
5.
1.
Introduction
Liquidity ratios
Profitability ratios and activity ratios
Financial leverage ratios
Shareholder ratios
Introduction
As a manager, you may want to reward employees based on their performance. How do you know
how well they have done? How can you determine what departments or divisions have performed
well? As a lender, how do decide the borrower will be able to pay back as promised? As a manager of
a corporation how do you know when existing capacity will be exceeded and enlarged capacity will be
needed? As an investor, how do you predict how well the securities of one company will perform
relative to that of another? How can you tell whether one security is riskier than another? We can
address all of these questions through financial analysis.
Financial analysis is the selection, evaluation, and interpretation of financial data, along with other
pertinent information, to assist in investment and financial decision-making. Financial analysis may be
used internally to evaluate issues such as employee performance, the efficiency of operations, and
credit policies, and externally to evaluate potential investments and the credit-worthiness of
borrowers, among other things.
The analyst draws the financial data needed in financial analysis from many sources. The primary
source is the...

...Liquidity Ratios: Current Ratio = Current Assets/Current Liabilities
Efficiency Ratios Asset Turnover Ratio = Sales Revenue/ (Fixed Assets + Current Assets)
Profitability Ratios Net Profit Margin = (Net Profit x 100) /Sales Revenue
Return on Capital Employed = Net Profit (Operating Profit) x 100
(ROCE) Capital Employed
Solvency Ratios Gearing Ratio = Total Liabilities/Shareholders Equity
Investment Ratios Earnings per Share (EPS) = Net Income – Dividends on preferred stock
Average Outstanding Shares
Price/Earnings Ratio (P/E) = Market Price of Share/EPS
Aviation Industry Specific Ratios…
Available Seat Miles = Total No. of Seats Available for Transporting Passengers
(ASM) x No. of Miles Flown during Period
Revenue Passenger Mile = No. of Revenue Paying Passengers x
(RPM) No. of Miles Flown During Period
Load Factor
Quick/Acid Test Ratio = Current Assets less Stock/Current Liabilities
Dividend Yield = Annual Dividends per Share
Price per Share
Liquidity Ratios
Current Ratio = Current Assets/...

...902.00 compared with $15724.00 in 2012, followed by $14613.00 in 2011. Qantas seen a relatively flat in the revenue.
Gross profit in 2013 is $4315.0 with $4181.0 in 2012, followed by $3939.0 in 2011.
Net income in the consecutive three years are 5, -245, 250. There is an dramatic fluctuation appeared.
Ratio analysis
Year/ratio
2011
2012
2013
Industry average
Current ratio
0.90
0.77
0.82
Quick ratio
0.78
0.65
0.70
Gross profit ratio
55.6
51.7
54.6
Receivable turnover ratio
13.59
13.95
12.49
Inventory turnover ratio
18.45
19.25
19.51
Net profit ratio
1.74
-1.64
0.03
Debt to equity ratio
0.89
0.92
0.88
Asset turnover ratio
0.70
0.71
0.77
Current ratio is always larger than quick ratio, it may because that inventory is overstated. Inventory turnover ratio has a relatively slight rise , it also can be an indicator for the overstated inventory.
As per the current ratio, overstating inventory allows qantas to avoid booking expenses and reduces the cost of goods sold. It could also indicate obsolete stock problems.
Ratio
Explanation
Account
Key assertion
Explanation
Current ratio
The change in current ratio compared with the previous year, supports the idea that...