會計英語Unit 9

1、 Unit 9 Statement Analysis Learning Objectives The main purpose of this unit is to introduce the methods of analysing the statements. After learning this unit, you should be able to:1. Identify the three forms of ratio analysis methods.2. Describe the main ratios.3. Outline the four ratios associate

2、d with financial structure.4. Explain the five ratios associated with profitability.5. Describe the characteristics of horizontal analysis.6. Outline the characteristics of vertical analysis. 7. Master the main accounting terms related to the statement analysis.Lead In Here is a simple financial sta

3、tement of ABC Company. Read it and discuss the following questions with your partner: items balance Cash and cash equivalents600,000 Accounts receivable5,000,000Inventory7,500,000 Buildings and equipments15,000,000 Total assets28,100,000 Current liabilities3,400,000 Long-term liabilities2,000,000Pai

4、d-in capital15,000,000 Retained earnings7,700,000Total liabilities and owners equity28,100,000 Questions:1. What information can you get from this statement?2. Do you think the company operate well or not? Give your reasons. 3. There are many kinds of methods for analyzing financial statements. Amon

5、g them, Ratio analysis is the most useful and important method. It includes financial structure ratios, profitability ratios and asset management measures.4. 9.1 Financial Structure Ratio Analysis 5. Financial structure ratios are based on the balance sheet. They are used to analyze the companys liq

6、uidity and leverage. Accordingly, there are two types of ratios: the liquidity ratios and the leverage ratios. Current ratio and quick ratio are two widely used ratios to assess the liquidity of a company. And the leverage ratios include debt ratio and equity multiplier. They are used to examine the

7、 accounting entitys financial leverage. The formulation to calculate the four ratios are as below：1. Current ratio =Current assets/Current liabilities2. Quick ratio=Quick assets/Current liabilities =Current assets-Inventories/Current liabilities Usually, the current assets refer to assets that can b

8、e transferred into cash easily. Quick assets are those that can be most easily transferred into cash. Inventories are considered as the least transferable current assets. Therefore, they dont belong to quick assets. Quick assets equal to current assets minus inventories. These two ratios reflect the

9、 companys ability to repay its liabilities 3. Debt ratio = Total liabilities /Total assets4. Equity multiplier =Total assets/Total owners equityActivity：Discuss the following question with your partner.Explain the main ratios used to reflect a companys financial structure.9.2 Profitability Ratio Ana

10、lysis Profitability ratios are measures taken to examine the companys operating abilities. Here we just introduce some widely used ones.1. Gross profit ratio =Sales-Costs of goods sold /Total salesThis ratio explains the percentage of value over product costs.2. Profit margin =Net income/Total sales

11、This ratio shows how much net income we will get if we have $1 sale. 3. Operating profit ratio = Earnings before interest and taxes/Total salesThis ratio reflects the operating results. For most corporations, the operating gains are the most important section of its total earnings.4. Return on asset

12、s = Net income/ Total assets5. Return on owners equity = Net income/Total owners equityThese two ratios refer to the balance sheet and the income statement. They explain the profitability of total assets and net assets. The above ratios are based on the result of current economic activities. If thes

13、e ratios are high, the company will have great potential for further development. Activity：Discuss about the following question with your partner.Explain the main ratios used to reflect a companys profitability.9.3 Asset Management Measures In addition to the financial structure analysis and the pro

14、fitability analysis, there are some measures to examine a companys assets management. They can evaluate how well a company uses its assets. They include inventory turnover and accounts receivable turnover. They are calculated by the following formulations.1. Inventory turnover = Costs of goods sold

15、/Inventory2. Accounts receivable turnover =Sales/Accounts receivableThe two ratios describe the efficiency of the assets management. Activity：Discuss the following question with your partner. Say something about the ratio analyses used in our daily life.9.4 Other Statement Analysis Methods Horizonta

16、l AnalysisHorizontal analysis is also called trend analysis. It uses several years accounting information to decide which accounts change more frequently and which ones are more stable. So its easy to decide the trend of the company in the future. Vertical Analysis There is another name for this ana

17、lysis method, commonsize analysis. It emphasizes on the internal relationships among each item. In actual practice, percentage is often used. Through the percentage, we can see which items contribute more to the company. Activity：Discuss the following question with your partner.Whats your opinion ab

18、out the differences between horizontal analysis and vertical analysis?Notes & Grammar 1.And the leverage ratios include debt ratio and equity multiplier. They are used to examine the accounting entitys financial leverage. 杠桿比率包括負債比率和權益乘數。它們是用來衡量會計主體的財務杠桿指標。只有負債和所有者權益維持在適當的水平時，企業(yè)的財務成本才最低。負債比例過高，資本成本低，但財務風險高，企業(yè)面臨到期還本付息的風險；如果負債的比例太小，企業(yè)經營的絕大部分資金都由投資者支付，雖然降低了財務風險，但是企業(yè)的資本成本會升高。所以杠桿指標對企業(yè)來說非常重要。2.Quick assets are those that can be most easily transferred into cash.速動資產是那些最易變現(xiàn)的資產。速動資產是根據資產的變現(xiàn)能力劃分的，涉及到的主要項目有現(xiàn)金、短