Chapter17

AnalysisandInterpretationofFinancialStatementsofaCorporationChapter17

AnalysisandInte1MoneyAmount&PercentageChangesTrendPercentagesComponentPercentagesRatiosToolsofAnalysisMoneyAmount&PercentageChan2MoneyAmount&PercentageChanges20×420×320×220×4over20×320×3over20×2Netsales750000700000650000500007.14%500007.69%Themoneyamountofanychangeisthedifferencebetweentheamountforacomparisonyearandforabaseyear.Thepercentagechangeiscomputedbydividingtheamountofthechangebetweenyearsbytheamountforthebaseyear.MoneyAmount&PercentageChan3天津中西機床技術(shù)培訓(xùn)中心ElCSMCTianjinSino–Spanish4天津中西機床技術(shù)培訓(xùn)中心ElCSMCTianjinSino–Spanish5RatiosAratioisasimplemathematicalexpressionoftherelationshipofoneitemtoanother.Let’slookattheillustrativeanalysisforGuangliCo.LtdRatiosAratioisasimplemath6GuangliCo.LtdCondensedComparativeBalanceSheetDecember31,20×4andDecember31,20×5

AmountIncreaseordecreasePercentageoftotalassets

20×520×4Amount%20×520×4ASSETS

Currentassets1400001200002000016.722.923.9Currentassets3247002680005670021.25353.4OtherAssets1478001140003380029.624.122.7Totalassets61250050200011050022100100LIABILITIES&STOCKHOLDERS'EQUITY

CurrentLiabilities2900033000(4000)-12.14.76.5Long-termnotespayable1000015000(5000)-33.31.62.9TotalLiabilities3900048000(9000)-18.86.49.6GuangliCo.LtdCondensedCompa7Stockholders'equity

12%preferredstock,2yuanpar600004000020000509.88Commonstock,1yuanpar650006000050008.310.611.9Additionalpaid-incapital1658001476001820012.327.129.4Retainedearnings282700206400763003746.241.1Totalstockholders'equity57350045400011950026.393.690.4Totalliabilities&stockholders'equity61250050200011050022100100Stockholders'equity12%8GuangliCo.LtdComparativeIncomeStatementFortheYearsEndedDecember31,20×5andDecember31,20×4

AmountIncreaseordecreasePercentageofnetsales

20×520×4Amount%20×520×4Netsales90000075000015000020100100Costofgoodssold500000420000800001955.656Grossprofitonsales4000003300007000021.244.444Operatingexpenses

Sellingexpenses11700010000017000171313.3Generalexpenses150000120000300002516.716Totaloperatingexpenses2670002200004700021.429.729.3Operatingincome1330001100002300020.914.814.7Interestexpense2000020000002.22.7Incomebeforetaxes113000900002300025.612.612Incometaxes23000190004000212.62.5Netincome90000710001900026.8109.5Earningspershare1.271.1

GuangliCo.LtdComparativeInc9GuangliCo.LtdStatementofRetainedEarningsFortheYearsEndedDecember31,20×5andDecember31,20×4

AmountIncreaseordecrease

20×520×4Amount%Retainedearnings,beginningofyear2064001462006020041.2Netincome90000710001900026.8

2964002172007920036.5Less:Dividendsoncommonstock(0.1yuanpershareforbothyears)650060005008.3Dividendsonpreferredstock(12%ofparvalue)72004800240050

1370010800290026.9Retainedearnings,endofyear2827002064007630037GuangliCo.LtdStatementofRe10GuangliCo.LtdComparativeScheduleofWorkingCapitalAsofDecember31,20×5andDecember31,20×4

AmountIncreaseordecreasePercentageofnetsales

20×520×4Amount%20×520×4CurrentAssets

Cash40000300001000033.328.625Receivable(net)6000050000100002042.941.7Inventories3000035000(5000)-14.321.429.2PrepaidExpenses10000500050001007.14.2TotalCurrentAssets1400001200002000016.7100100CurrentLiabilities

NotesPayable1000016000(6000)-37.534.548.5AccountsPayable1900017000200011.865.551.5TotalCurrentLiabilities2900033000(4000)-12100100WorkingCapital111000870002400027.6

GuangliCo.LtdComparativeSch11AdditionalinformationYear-endpricesofcommonstockwere16yuanpersharein20×5and15yuanpersharein20×4.Commonstockholders’equityatthebeginningof20×4was400000yuan.Inventoryatthebeginningof20×4was25000yuan.Accountsreceivableatthebeginningof20×4was40000yuan.AdditionalinformationYear-end12AnalysisbyCommonStockholders20×520×4Earningspershare90000–7200

71000–48006500060000=1.27=1.10Dividendyield0.10.1

0.630.67Assumingthatthestockpricewas15yuanpershareonDecember31,20×4and16yuanpershareonDecember31,20×5.AnalysisbyCommonStockholder13AnalysisbyCommonStockholders20×520×4Price-earningsratio16151.271.10=12.6=13.6Bookvaluepershare(573500－2.5×30000)(454000－2.5×30000)ofcommonstock6500060000=7.67=6.73Operatingexpenseratio267000220000900000750000=29.67%=29.33%AnalysisbyCommonStockholder14AnalysisbyCommonStockholders20×520×4Returnonassets133000110000(502000+612500)/2(460000+502000)/2=23.9%=22.9%Returnonequity90000－720071000－4800(404000+498500)/2(400000+404000)/2=18.4%=16.5%Equityratio573500454000612500502000=93.6%=90.4%AnalysisbyCommonStockholder15AnalysisbyLong-termCreditor

20×520×4Timesbondinterestearned1330001100002000020000=6.7=5.5Debtratio3900048000612500502000=6.4%=9.6%AnalysisbyLong-termCreditor16AnalysisbyShort-termCreditors20×520×4Workingcapital140000－29000120000－33000=111000=87000Inventoryturnover500000420000(35000+30000)/2(25000+35000)/2=15.38times=14timesAveragenumberof365365daystosellinventory15.3814=23.7days=26.1days

AnalysisbyShort-termCredito17AnalysisbyShort-termCreditors20×520×4Accountsreceivableturnover900000