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FRA-CFA

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by

Nam Phệ

on 14 November 2013

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Transcript of FRA-CFA

Financial Analysis
RATIOS ANALYSIS
Financial analysis Technique
DUPONT ANALYSIS of ROE
1. why we need FRA ?
1. HOW we analyse FR ?
Understand company's health
Provide info to investors for their investments decision
Ratio analysis
Cross-sectional analysis ( compare to industry norm)
Time series analysis (compare to past company's ratios)
Common-size analysis (BS/ IS)
Graphic analysis ( line/bar/ stacked bar graph)
Regression analysis
What is bad point ?
Not good in
isolation
Different in
accounting policy
hard in finding comparable industry ratio for companies operate in multiple industries
all ratios must be relative to one another for concluding
determine the target for a ratio requires some range of acceptable values
Activity Ratios
Liquidity Ratios
Solvency Ratios
Profitability Ratios
Valuation Ratios
Consider Ratio analysis context:
Company
goal and strategy
Industry norm
Ratios must be
industry specific
multiple
lines of business
distort aggregate ratios
differences in
accounting method
Economic condition
For ratios use:
BS items: use
value of current BS accounts
IS items: use
values of current IS accounts
BS & IS items: use
values of current IS accounts
and
average values
of BS accounts

Study on equity investment
WHY we use Dupont model?
HOW we use Dupont model?
it allows analyst to see the impact of
leverage
,
profit margin
and
turnover
on shareholder return
Original Dupont
ROE =
Net Income
Equity
X
Revenue
Revenue
X
Asset
Asset
ROE =
Net Income
Revenue
Revenue
Equity
X
X
ROE =
Net Income
Asset
Asset
Revenue
Revenue
X
Equity
net profit margin
asset turnover
leverage ratio
Extended Dupont
= ROA X
Asset
Equity
ROE =
Net Income
EBT
EBT
EBIT
EBIT
Revenue
Revenue
Total Assets
Total Assets
Total Equity
X
X
X
X
Tax burden
Interest burden
EBIT margin
Full transcript