Financial Statements and Ratios

Front

Components and users of financial statements

Back

Financial statements include balance sheets, income statements, and cash flow statements. Users include investors, creditors, and management.

Front

Management uses financial statements for strategic planning and decision-making.

Back

Management uses financial data to improve operational efficiency.

Front

Historical analysis

Back

Examines past financial data to identify trends and patterns.

Front

Efficiency ratios

Back

Evaluate how well a company uses its assets and liabilities to generate sales and maximize profits.

Front

Purpose of leverage ratios

Back

To understand the financial risk associated with a company's capital structure.

Front

Example of an efficiency ratio

Back

Inventory turnover ratio

Front

Liquidity Ratios

Back

Liquidity ratios include net working capital, current ratio, and acid test ratio (quick ratio).

Front

Net working capital

Back

Net working capital = current assets - current liabilities

Front

Current ratio

Back

Current ratio = \frac{current \: assets}{current \: liabilities}

Front

Value of 12% debentures

Back

RM 420,000