Ibf final presentation

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  • 1.Introduction to Business Finance Group: Members: Shahzaib Malik BB-2116 Abdul Ahad BB-2077 Hafeez Allah Sangru BB-2084 Talha Hassan BB-2131 Maaz Uddin BB-25227

2. Quick Ratio Recognizing that inventories may be less liquid than other current assets, and in some cases, when liquidated quickly result in cash flows that are less than book value, sLiabilitieCurrent sInventorieAssetsCurrent RatioQuick 3. Quick Ratio The quick ratio gives a clearer indication of the firms ability to meet its maturing financial obligations out of current, liquid assets. Quick assets include those current assets that presumably can be quickly converted to cash at close to their book values. Quick ratio is viewed as a sign of a company's financial strength or weakness; it gives information about a companys short term liquidity. The ratio tells creditors how much of the company's short term debt can be met by selling all the company's liquid assets at very short notice. 4. Debt Ratio Is a stock ratio indicating the proportion of total assets financed by debt at a particular point in time . AssetsTotal sLiabilitieTotal ratioDebt 5. Debt Ratio The debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. The higher the ratio, the greater the risk associated with the firm's operation. A low debt ratio indicates conservative financing with an opportunity to borrow in the future at no significant risk. 6. Total Assets Turnover TurnoverAssetsTotal sTotalAsset Sales The amount of sales generated for every dollar's worth of assets. It is calculated by dividing sales by assets . 7. Total Assets Turnover There is no set number that represents a good total asset turnover value because every industry has varying business models. It also depends on the proportion of labour costs in relation to the capital required, i.e. whether the process is labour intensive or capital intensive. The higher the number, the better. If there is a low turnover, it may be an indication that the business should either utilize its assets in a more efficient manner or sell them. But it also indicates pricing strategy: companies with low profit margins tend to have high asset turnover, while those with high profit margins have low asset turnover. 8. Days Sales Outstanding A measure of the average number of days that a company takes to collect revenue after a sale has been made days365/salesannual receivableaccounts =ratioDSO 9. A low DSO number means that it takes a company fewer days to collect its accounts receivable. A high DSO number shows that a company is selling its product to customers on credit and taking longer to collect money. Days Sales Outstanding is an average collection period in days for the accounts receivable (accounts payable outstanding in days). Days Sales Outstanding 10. Earning Per Share The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability. Growth in EPS is an important measure of management performance because it shows how much money the company is making for its shareholders Not only due to changes in profit, but also after all the effects of issuance of new shares (this is especially important when the growth comes as a result of acquisition). 11. gOutstandinSharesCommon IncomeNet SharePerEarningOR gOutstandinSharesAverage StockPreferredonDividend-IncomeNet (EPS)SharePerEarnings 12. Earning Per Share Earnings per share is generally considered to be the single most important variable in determining a share's price. It is also a major component used to calculate the price-to- earnings valuation ratio. ShareperEarning ShareperValueMaket RatioP/EorRatioEarning-Price 13. 2012 2011 2010 2009 2008 Oil & Gas Industrial Average 0.81 0.77 0.77 0.72 0.70 Exxon Mobil Corp. 0.70 0.67 0.65 0.74 1.14 Chevron Corp 1.25 1.25 1.30 1.01 0.79 0.00 0.50 1.00 1.50 2.00 2.50 3.00 Quick OR Acid Test Ratio 14. 2012 2011 2010 2009 2008 Chevron Corp. 0.99 1.17 1.07 1.02 1.64 Exxon Mobil Corp. 1.28 1.31 1.14 1.20 1.93 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 Total Asset Turnover 15. Exxon Mobil Corp. Chevron Corp. 0 2 4 6 8 10 12 14 2012 2011 2010 2009 2008 2012 2011 2010 2009 2008 Exxon Mobil Corp. 9.7 8.42 6.22 3.98 8.69 Chevron Corp. 13.32 13.44 9.48 5.24 11.67 Earning Per Share 16. Thank You