2. Financial Statements
Income Statement
Balance Sheet
Cash Flow Statement
Statement of Retained Earnings
3. Analytical Tools and Techniques
Horizontal Analysis
Formula for Percentage Change
Absolute and Percentage Changes
Development of Trends
Graphical Presentation
(R. Roque)
4. Vertical Analysis
Conversion Procedures
Comparison with Other Firms’
Financial Statements
(R. Roque)
5. Ratio Analysis
Tests of Liquidity
Current Ratio
Acid-Test Ratio
Working Capital Activity Ratios
* Receivable Turnover
* Inventory Turnover
Operating Cycle Ratio
Trade Payables Turnover
6. Tests of Solvency
Times Interest Earned
Debt/Equity Ratio
Debt Ratio
Equity Ratio
7. Tests of Profitability
Return on Sales
Return on Total Assets
Return on Owner’s Equity
(Proprietor’s/ Partner’s/
Stockholder’s Equity)
Earnings per Share
8. Market Tests
Dividends Yield
Dividends Payout
Price/ Earnings Ratio
Gross Profit Variance Analysis
4 Way Test
6 Way Test
2 Way Test