Page 22 - Financial Statement Analysis
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Contents xix
Operating Activity Analysis 11 Equity Analysis
of Liquidity 537 and Valuation 600
Accounts Receivable Liquidity
Earnings Persistence 602
Measures 537
Recasting and Adjusting
Inventory Turnover
Earnings 602
Measures 539
Determinants of Earnings
Liquidity of Current
Persistence 607
Liabilities 542
Persistent and Transitory Items
Additional Liquidity Measures 543
in Earnings 609
Current Assets Composition 543
Earnings-Based Equity
Acid-Test (Quick) Ratio 543
Valuation 612
Cash Flow Measures 543
Relation between Stock Prices
Financial Flexibility 544
and Accounting Data 612
Management’s Discussion
Fundamental Valuation
and Analysis 544
Multiples 613
What-If Analysis 544
Illustration of Earnings-Based
Section 2: Capital Structure Valuation 615
and Solvency 547 Earning Power and Forecasting
Basics of Solvency 547
for Valuation 617
Importance of Capital
Earning Power 617
Structure 547
Earnings Forecasting 618
Motivation for Debt Capital 549
Interim Reports for Monitoring
Adjustments for Capital Structure
and Revising Earnings Estimates 621
Analysis 551
Capital Structure Composition Comprehensive Case:
and Solvency 552
Applying Financial
Common-Size Statements in Solvency
Analysis 553 Statement Analysis 634
Capital Structure Measures for Solvency Steps in Analyzing
Analysis 553 Financial Statements 636
Interpretation of Capital Structure Building Blocks of Financial
Measures 555 Statement Analysis 638
Asset-Based Measures Reporting on Financial
of Solvency 555 Statement Analysis 639
Earnings Coverage 556 Specialization in Financial
Relation of Earnings to Fixed Statement Analysis 639
Charges 556 Comprehensive Case: Campbell
Times Interest Earned Analysis 560 Soup Company 640
Relation of Cash Flow to Fixed Preliminary Financial
Charges 562 Analysis 640
Earnings Coverage of Preferred Sales Analysis by Source 640
Dividends 563 Comparative Financial
Interpreting Earnings Coverage Statements 642
Measures 564 Further Analysis of Financial
Capital Structure Risk and Statements 643
Return 565 Short-Term Liquidity 651
Appendix 10A: Capital Structure
Rating Debt 566 and Solvency 654
Appendix 10B: Return on Invested Capital 655
Predicting Financial Distress 568 Analysis of Asset Utilization 659
