Financial Statement Analysis
MAKI 503 ' ACCOUNTING FOR MANAGERS
Faculty Member: Dr. Binsar H. Simanjuntak Ak., MBA, CMA
Date: April 25, 2008
MM PROGRAM MAJOR IN STRATEGIC MANAGEMENT
Table of Contents
Short-term Liquidity Analysis
Amount of Working Capital
Account Receivable Turnover Rate
Long-term Credit Risk Analysis
Trend in Net Cash Provided by Operating Activities
Interest Coverage Ratio
Gross profit rate
Operating expense ratio
Net income as percentage of net sales
Earnings per share
Return on assets
Return on equity
Current Market Price Analysis
Market value of financial instrument
Price earnings ratio
Book value per share
This document is an individual assignment of MAKI 503 ' Accounting for Managers course, Prasetiya Mulya, MM Program Major in Strategic Management, Batch 33. The assignment is to analyze financial statement using recent annual report of the chosen publicly owned company, PT. Bakrie Telecom Tbk, to help investors and creditors analyze the financial statements to make an investment decision whether to invest in the equity securities of the company.
For the most part, measurement represented in this document has been limited to a considerable extent on the financial statement published in annual and quarterly reports of year 2006 and 2007 only, as Bakrie Telecom listed on the Jakarta Stock Exchange in February 2006. Additional information is filed with the Capital Market Supervisory Board (Bapepam) and is available to the public in hard copy as well as on the Internet. Bankers and major creditors usually are able to obtain detailed financial information from borrower simply by requesting it as a condition for granting a loan. Suppliers and other trade creditors may obtain some financial information about almost any business from credit rating agencies.
Measures of short-term liquidity
• Current ratio; a measure of short-term debt-paying ability. • Quick Ratio; an “acid test” of short-term debt paying ability. • Working capital; another ‘acid test”
• Receivable turnover rate; indicates how quickly receivables are collected. • Days to collect average account receivable.
Measures of long-term credit risk
• Debt ratio; percentage of assets financed by creditors; indicates relative size of equity position. • Trend in net cash provided by operating activities; a company’s ability to generate the cash necessary to meet its obligation. • Interest coverage ratio; indicator of company’s ability to meet its interest payment obligations.
Measures of profitability
• Percentage change in net sales and net income. The rate at which a key measure is increasing or decreasing; the “growth rate”. • Gross profit rate; a measure of the profitability of the company’s product. • Operating expense ratio; reflects management ability to control expenses. • Operating income; the profitability of company’s basic business activity • Net income as percentage of net sales; indicator of management’s ability to control costs. • Earnings per share; net income applicable to each share of common stock. • Return on assets; a measure of productivity of assets, regardless of how the assets are financed. • Return on equity; the rate of return earned on the stockholders’ equity in the business. • Return on common stockholders’ equity
Measures for evaluating the current market price
• Market value of...
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