One technique in Financial Statement Analysis, Cash flow analysis is a detailed study of the net
change in cash as a result of operating, investing, and financing activities during the period.
The Statement of Cash Flows - the basic financial statement prepared and used in analyzing cash flows.
The report includes cash receipts, cash payments and the net change in cash. These are results from
operating, investing, and financing activities of the company during a certain period.
Cash Flows - include cash and cash equivalent
MAFundamentals defines the foundation of Management Accounting from cost concept, classification and analysis. It provides general discussion on COST, VOLUME, PROFIT, VARIANCE and other information necessary for performance measurement, decision making and pricing.
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MAFundamentals defines the foundation of Management Accounting from cost concept, classification and analysis. It provides general discussion on COST, VOLUME, PROFIT, VARIANCE and other information necessary for performance measurement, decision making and pricing. |
Gross Profit Variance Analysis
One technique in the analysis of Financial Statement, Gross Profit Variance Analysis is used to
compare actual data (represented here by 200B) with budgeted data, standard data, previous year's data, or
base year data (represented here by 200A).
Normally, these involves the Sales Variance and the Cost variance in consideration of the price and volume or quantity factors.
Discussed here are the four (4) types.
1.) 4-WAY ANALYSIS
Sales Variance:
Normally, these involves the Sales Variance and the Cost variance in consideration of the price and volume or quantity factors.
Discussed here are the four (4) types.
1.) 4-WAY ANALYSIS
Sales Variance:
- Price factor = difference in selling prices x 200B units
- Volume or quantity factor = difference in units x 200A selling price
- Price factor = difference in cost prices x 200B units
- Volume or quantity factor = difference in units x 200A cost price
Price Level Changes and Inflation
The two effects of changing price levels are:
The Price Indices used in the calculation of price level changes are:
- Inflation - an increase in the general price level
- Deflation - a decrease in the general price level
The Price Indices used in the calculation of price level changes are:
- Consumer Price Index (CPI) - measures the price level by a monthly pricing of a specific set of goods/services purchased by a typical urban consumer.
- Gross Domestic Product Price Index (GDP Deflator) - includes the prices of all goods and services produced in the country. It includes investment, government purchases, exports, as well as consumer goods and services.
- Producer Price Index - measures the prices of specified commodities at the time of their first commercial sale.
Valuation Ratios
One method of Financial Ratio Analysis, Valuation Ratios is a measure of shareholder value as reflected in the price of the firm's stock.
- Book Value Per Share
FORMULA SIGNIFICANCE Equity
Shares OutstandingMeasure the amount of net assets available to the share holders of a given type of stock.
- Market to Book Ration or Price to Book Ratio
Market Price per Share
Book Value per ShareMeasure how high is the share's market price in relation to book value. Well managed firms should sell at high multiples of their book value.
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