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Fundamentals of Financial Management, 13e Chapter 6: Financial Statement Analysis

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Fundamentals of Financial Management, 13e Chapter 6: Financial Statement Analysis

Formulas
Financial Statement Analysis
6.1 Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.

Liquidity Ratios
Balance Sheet Ratios Liquidity Ratios

Current
Current Assets Current Liabilities

Shows a firm’s ability to cover its current liabilities with its current assets. 6.2 Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.

Liquidity Ratios
Balance Sheet Ratios Liquidity Ratios

Financial Leverage Ratios
Balance Sheet Ratios Financial Leverage Ratios

AcidAcid-Test (Quick)
Current Assets - Inv Current Liabilities

Debt-toDebt-to-Equity
Total Debt Shareholders’ Equity

Shows a firm’s ability to meet current liabilities with its most liquid assets. 6.3 Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.

Shows the extent to which the firm is financed by debt.
6.4 Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.

Financial Leverage Ratios
Balance Sheet Ratios Financial Leverage Ratios

Financial Leverage Ratios
Balance Sheet Ratios Financial Leverage Ratios Shows the relative importance of long-term debt to the long-term financing of the firm. 6.6 Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.

Debt-to-TotalDebt-to-Total-Assets
Total Debt Total Assets

Total Capitalization
(i.e., LT-Debt + Equity)

Total Debt Total Capitalization

Shows the percentage of the firm’s assets that are supported by debt financing. 6.5 Van Horne and Wachowicz, Fundamentals of Financial Management, 13th...