ACT 5140 REVIEW: FINANCIAL ANALYSIS ASSESSMENT Coverage: Chapter 14 and Dr. Litt's Financial Analysis Lecture and Problems Focus: Chapter 14, Dr. Litt's Chapter Presentations, Dr. Litt's Lectures, AND ability to solve every Chapter 14 Assignment question and understand the interpretation of each solved amount Contains: 20 Questions Time Limit: 70 Minutes CONTENT COVERED: Know: Income Statement: Order and elements making up: Gross Income, Operating Income and Net Income (which accounts are included and where) Balance Sheet: Elements and classifications within A, L, & SE (which accounts are included and where) Calculate: Current Ratio Working Capital Quick Ratio A/R Turnover * Days to Collect* Inventory Turnover* Days to Sell* Operating Cycle Debt Ratio Interest Coverage Ratio Gross Profit Margin Net Profit Margin ROA* ROE* *These ratios involve BOTH income statement and balance sheet amounts, so you have to use the average of the balance sheet amount (which you may be given or have to calcualte). Interpret: Common Size (Vertical) Analysis: how is this performed on both the income statement and balance sheet? Trend (Horizontal) Analysis: how this is performed on both the income statement and balance sheet? When is each account or subtotal trend considered Favorable or Unfavorable? Quick and Current Ratio - what indicates liquidity? Quick Ratio - how does it relate to the current ratio and how is it different? Days to Sell and Days to Collect - is higher or lower better? How would given policies or account changes impact them?) Debt Ratio - what does this tell you about the financing structure of the company? What about the riskiness of a company? Interest coverage ratio - what does this tell you? Is higher or lower better? Price-Earnings Ratio - what does this tell you about a company and how the market values the company? Dividend yield - what does this tell you about a company? Net Cash Flow from Operating Activities - what does this generally tell you? What has Dr. Litt emphasized about this? Lectures: Key trends discussed in our Starbucks analysis Anything explained or elaborated upon by Dr. Litt in her lectures - SO WATCH THEM CLOSELY! YOU WILL LEARN FROM THEM - I PROMISE.