Financial Management, 12th Edition by Pearson

CHAPTER 25

Financial Statement Analysis

LEARNING OBJECTIVES

• Explain the nature, types and importance of ratios.
• Calculate liquidity ratios of a firm and comment on its liquidity condition.
• Calculate leverage and coverage ratios of a firm and comment.
• Calculate turnover (efficiency) ratios of a firm and interpret.
• Calculate profit margin and return ratios of a firm and comment on its profitability.
• Calculate valuation ratios and explain their implications for the shareholders and the firm.
• Discuss the DuPoint analysis and illustrate with an example.
• Describe the importance of common-size and comparative statements.
• Make a complete financial analysis of a company and explain its financial health and diagnose its problems.

INTRODUCTION