Financial analysis

• 1. Performance
• 2. Vulnerability
• 3. Cash flow

• 1. Performance 
•     1.1 Profitability
•     1.2 Efficiency
•     1.3 Sustainability

• 2. Liquidity
• 3. Solvency

• 1. Gross margin
• 2. Profit margin
• 3. ROE
• 4. ROA

Gross Profit / Sales

Net Operating profit/ Sales

Reward for owners - willingness to repay

NPAT/ Equity

Profitability of asset usage

NPAT/ Total Assets

1. Sales/Total Assets => asset efficiency

2. Total Assets/Equity => leverage

3. NPAT / Sales => Profitability

• 1. Cash Profit After Tax (CPAT)
• 2. EBIDA
• 3. EBIT
• 4. EBITDA

Cash generation after all items

NPAT + Depreciation

Cash generation before the influence of interest and after tax

NPAT + Interest + Depreciation

Core profit performance before influence of Interest & Tax

NPAT + Interest + Tax

Cash generation before influence of Interest of Interest, Depreciation, & Tax

NPAT + Interest + Depreciation + Tax

• Measure a firm's ability to meet the short-term obligations

Indicates if the company pay off its short-term liabilities in an emergency by liquidating its current assets.

Current ratio = CA/CL

• - First cut indicator of liquidity
• - Need to consider quality of current assets
•   - Inventory T/O
•   - AR T/O
•   - Aging list

Company may have a hard time paying their current liabilities in the short run and deserves further investigation

• Too high may indicate:- 
• 1. Company is carrying too much inventory,
• 2. Lax payment collection standards
• 3. Holding too much cash

• More stringent than current ratio
• Excludes inventory
• Compares short-term marketable securities and AR to current liability

TCA - Inventory/ TCL