Page 698 - Accounting Principles (A Business Perspective)

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Fiscal Year
2010 2009
Cash provided by operating activities (a) $1,101.0 $972.3
Average shares outstanding (b) (assumed) 146.6 145.2
Cash flow per share of common stock (a)/(b) $7.51 $6.70
Final considerations in financial statement analysis
Standing alone, a single financial ratio may not be informative. Investors gain greater insight by computing and
analyzing several related ratios for a company. Exhibit 135 summarizes the ratios presented in this chapter, and
Exhibit 136 presents them graphically.

Financial analysis relies heavily on informed judgment. As guides to aid comparison, percentages and ratios are
useful in uncovering potential strengths and weaknesses. However, the financial analyst should seek the basic
causes behind changes and established trends.

An accounting perspective:

Uses of technology

Most companies calculate some of the ratios we have discussed, if not all of them. To efficiently and
effectively perform these calculations, accountants use computers. Some programs that gather
information in the preparation of financial statements calculate the ratios at the end of a period.
Accountants also create spreadsheets to perform this task. Remember, to interpret the numbers
correctly, investors and management must compare these ratios with the industry in which the
company operates.

Accounting Principles: A Business Perspective 699 A Global Text