Seminar 8

Financial Analysis
Analysis Implementation
Dr. Chen Chen
Email: chen.chen2@monash.edu

Presentation title

Valuation Flow Chart

Business and
Industry analysis

Accounting analysis

Economic analysis
Business strategy analysis
Industry analysis

Financial Analysis

Valuation

Financial analysis

Accounting
analysis

Forecast

Valuation

Corporate governance
analysis

Presentation title

Financial Analysis
Financial analysis includes:
Ratio analysis
Cash flow analysis
Value of a firm is determined by (1) profitability and (2) growth.
Financial analysis of past years provides a benchmark for
forecasting growth and profitability.
Hence the importance of historical data (financial
statements) and the reliability of these statements for
forecasting purposes.

Presentation title

Financial Analysis
Ratio analysis to assess how various line items in
financial statements relate to each other and to measure
relative performance

Cash flow analysis to evaluate liquidity and the

management of operating, investing, and financing
activities as they relate to cash flow

Financial Analysis
Profitability and growth are influenced by a firms:
1. Product market strategies which are implemented via:
- Competitive strategy
- Operating policies
- Investment decisions
2. Financial market strategies which are implemented via:
- Financing policies
- Dividend policies

Presentation title

Financial Analysis

Hence, the following decisions can influence profitability and growth of

a company:
Operating management decisions
Investment management decisions
Financing strategy decisions

Presentation title

Drivers of an Organizations Profitability and Growth

Ratio Analysis
Evaluating ratios requires comparison against some benchmark. Such
benchmarks include:
Ratios over time from prior periods (time series)
Ratios of other firms in the industry (cross-sectional)
Some absolute benchmark (e.g., industry norm)
Common size analysis (common size statements)
Effective ratio analysis must attempt to relate underlying business
factors to the financial numbers

Time-series Analysis
Time-series analysis refers to the analysis of one ratio (e.g.ROE) for
one firm, over time.
Forecasting future profitability
The model can take the following form:
ROEi,t+1 = + ROEi,t + eit
The estimate of the coefficient will indicate the persistence of
ROE over a time period.

Limitation of time-series analysis

The problem with this type of analysis is that it might include
the effects of structural or economic changes
However, the mean reverting property of ROE or the random
walk property of earnings are important factors to be
considered in forecasting

10

Limitation of time-series analysis

11

Cross-sectional Analysis
Cross-sectional analysis refers to the analysis of a ratio (e.g.ROE) in
one period for all firms, preferably from the same industry
Overcomes some of the problems associated with time-series analysis
Enables comparison of the ratio of the company with the industry
average
For example, in terms of profitability, want company-specific ratio
to exceed industry average
If not publicly available, you must calculate the industry norm

12

Categories of Financial Ratios

(Key Performance Indicators-KPIs)
Profitability ratios
Asset management ratios
Debt and safety ratios
Cash flow ratios

13

Profitability Analysis
There are different types of profitability ratios
Important profitability ratios are:
ROE = NPAT before abnormal / (shareholders equity - outside
equity interests).
ROA = [Net Income + Interest Expense*(1-Corporate Tax Rate)]/
[Total Assets - Outside Equity Interests].
EBITDA margin = EBITDA / operating revenue.
Net profit margin = NPAT before abnormal / operating revenue

14

ROE Characteristics
ROE indicates how much return you have generated using the equity
capital invested by shareholders in your company
Evidence exists that, on average, long run ROE is between 11-13%
(for large Australian firms)
That is, firms with larger or smaller ROE will overtime tend to
revert to the range of 11-13%
Mean-reverting
What would be the forecast of ROE for the next 5 years of a company
that experienced 5 years (historical data) of high (say, 30%) ROE?
Theoretically, ROE must revert to the mean within the forecast
period

15

ROE-Mean Reversion

16

ROE-Mean Reversion

17

ROE-Comparisons of large Australian Firms

ASX
Code Company Name
Australia & New Zealand
ANZ Banking Group Ltd
Commonwealth Bank of
CBA Australia
National Australia Bank
NAB Limited
Westpac Banking
WBC Corporation

EBIT
Industry Margin

EBITDA
Margin

ROE

ROA

Financia
l
NOPLAT Leverag Price/Boo
Margin
e k Value

Bank

--

-- 14.74%

0.95%

--

--

1.78

Bank

--

-- 16.91%

0.92%

--

--

2.14

Bank

--

-- 11.76%

0.67%

--

--

1.39

Bank

--

-- 15.42%

0.95%

--

1.82

Iron ore/coal mining 37.44%

46.43% 25.70%

14.70%

24.84%

FMG

BHP Billiton Limited

Fortescue Metals Group
Ltd

Iron ore mining 34.67%

39.35% 51.57%

19.56%

33.51%

MCC

Macarthur Coal Limited

Coal Mining 25.98%

26.02% 11.29%

8.68%

18.79%

RIO

Rio Tinto Limited

Iron ore/coal mining 37.00%

37.52% 24.04%

13.81%

27.75%

CGJ

Coles Group Limited

MTS

Metcash Limited

TRS

The Reject Shop Limited

-180.12
%
359.16
%
138.85
%
172.20
%
248.83
%
264.16
%
259.83
%
236.48
%

BHP

WOW Woolworths Limited

Grocery retail

3.25%

4.81% 19.53%

8.83%

2.51%

Grocery wholesale

3.54%

3.94% 18.58%

8.24%

2.66%

Discount warehouse
Grocery/household
retail

6.95%

8.81% 45.30%

18.14%

5.15%

5.96%

7.50% 26.69%

11.99%

4.44%

3.64
7.39
2.73
2.61
4.45
2.26
7.91
4.26

ROE-BP
Dec 31, 2014 Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010
Selected Financial Data (USD $ in millions)
Profit (loss) for the year
attributable to BP
shareholders
Total BP shareholders'
equity

3,780

23,451

11,582

25,700

(3,719)

111,441

129,302

118,414

111,465

94,987

Ratio
ROE1

3.39%

18.14%

9.78%

23.06%

-3.92%

Chevron Corp.

12.41%

14.37%

19.18%

22.16%

18.10%

ConocoPhillips

13.23%

17.58%

17.56%

19.07%

16.57%

Exxon Mobil Corp.

18.65%

18.72%

27.06%

26.59%

20.74%

Royal Dutch Shell

PLC

8.65%

9.09%

14.11%

18.24%

13.60%

Benchmarks
ROE, Competitors

Presentation titleROE,

Sector

19

Decomposing Profitability: Traditional Approach

ROE = ROA x Financial leverage
= Net Income Preference Divs
Ave. Assets

Ave. Assets

Ave. Common shareholders Equity

ROA = Profit Margin x Asset Turnover

= Net Income Preference Divs *
Sales

Sales
Ave. Assets

ROE= Profit Margin x Asset Turnover x Financial leverage

Decomposing Profitability: DuPont Approach

Profitability Ratio
ROE

Debt and Safety Ratio:

Financial Leverage

Profitability Ratio
ROA
Asset
Mana
geme
nt
Ratio:
Asse
t
Turn
over

Profitability
Ratio: Profit
Margin

Dividend Payout
Ratio

Other Margins

Presentation title

Other Asset
Management Ratios

Other Debt and

Safety Ratios

21

Trade-off between Profit Margin and Asset Turnover

There is always a trade-off between profit margin and asset turnover.

Presentation title

22

More Leverage?
ROE= Profit Margin x Asset Turnover x Financial leverage
More Leverage?

Presentation title

23

Decomposing Profitability: Advanced DuPont Approach

An alternative approach focuses on the effects of leverage
A. Financial Leverage
B. Operating Liability Leverage

Decomposing Profitability: Advanced DuPont Approach

Decomposing Profitability: Advanced DuPont Approach

ROE is ultimately being equal to:

ROE RNOA [FLEV x RNOA - NBC ]

Spread

RNOA = ROOA + (OLLEV x OLSPREAD)

RNOA (Return on Net Operating Assets) = Operating Income (After tax) / Net Operating
Assets
FLEV (Financial Leverage) = Net Financial Obligation (Liability) / Equity
NBC(Net Borrowing Cost) = Net Interest Expenses (after tax) / Net Financial Obligation
SPREAD (Financial Spread)= RNOA NBC
ROOA = (Operating Income +Implicit Interest (after tax))/Operating Assets
OLLEV (Operating liability leverage)=Operating Liabilities/Operating Assets
OLSPREAD (Operating liability spread)=ROOA-Short-term Borrowing Rate (after tax)

Decomposing Profitability: Advanced DuPont Approach

When the effective interest rate after tax is larger than operating
ROA, Spread will be negative as will Spread*Net Financial
Leverage
Results in a reduction in ROE
Spread is the incremental economic effect of introducing debt
into the capital structure
Spread will be positive provided the effective interest rate
after tax is less than operating ROA

Benchmark for profitability analysis ROE and Cost of Equity Capital

To interpret ROE, comparison with firms cost of equity capital is most
appropriate
ROE is the return to equity holders (shareholders) and thus it is best
to be compared against the cost of equity capital

The advantage is that this measure is determined by the market and can
not be influenced by management
Calculation of cost of equity capital considered in week 10

Presentation title

28th

28

Benchmark for profitability analysis - ROA and WACC

ROA is the return on assets which have been financed by both

the equity capital and debt holders
ROA is best to be compared against the weighted average
cost of debt and equity (WACC, weighted average cost of
capital)
Calculation of WACC considered in week 10

ROE vs. ROA

Theoretically, ROE will be higher than ROA
The benchmark for ROA in Australia is in the range of 8-10%
Recall, ROE tends to revert to a mean in the range of 11-13%:
As such, firms cost of equity capital should be higher than their
WACC

Presentation title

30

ROA-BP
Dec 31, 2014

Dec 31, 2013

Dec 31, 2012

Dec 31, 2011

Dec 31, 2010

Selected Financial Data (USD $ in millions)

Profit (loss) for the
year attributable to BP
shareholders
Total assets

3,780

23,451

11,582

25,700

(3,719)

284,305

305,690

300,193

293,068

272,262

1.33%

7.67%

3.86%

8.77%

-1.37%

Chevron Corp.

7.23%

8.44%

11.24%

12.84%

10.30%

ConocoPhillips

5.89%

7.76%

7.19%

8.12%

7.27%

Exxon Mobil Corp.

9.30%

9.39%

13.45%

12.40%

10.07%

Royal Dutch Shell

PLC

4.21%

4.58%

7.38%

8.96%

6.24%

Ratio
ROA1
Benchmarks
ROA, Competitors

ROA, Sector

Presentation title

31

Assessing Operating Management:

Income Statement Ratios
Common-sized income statements facilitate comparisons of key
line items across time and different firms
Additionally, the following ratios are also helpful:
Gross profit margin
EBIT margin
EBITDA margin (EBIT also before depreciation &
amortisation)

Presentation title

32

Gross Profit Margin

Measures the profitability of sales, less direct costs of sales:

Gross profit margin = Sales Cost of sales
Sales
The gross profit margin is an indicator of:
The price premium that a firms product commands in the
market
The efficiency of a firms procurement and/or production
process

Presentation title

33

Gross Profit Margin-BP

Dec 31, 2014 Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010
Selected Financial Data (USD $ in millions)
Gross profit
Sales and other
operating revenues

44,286

53,258

48,427

65,754

16,281

353,568

379,136

375,580

375,517

297,107

Ratio
Gross profit margin1

12.53%

14.05%

12.89%

17.51%

5.48%

Benchmarks
Gross Profit Margin, Competitors
Chevron Corp.

23.62%

23.77%

25.69%

26.48%

27.22%

ConocoPhillips

40.96%

45.08%

44.75%

13.98%

15.50%

Exxon Mobil Corp.

24.85%

25.08%

25.83%

27.13%

29.13%

Royal Dutch Shell

PLC

15.15%

15.44%

15.23%

15.67%

16.42%

Presentation title

34

EBIT and EBITDA Margins

The EBIT margin provides a comprehensive measure of

operations:
EBIT margin = EBIT
Sales

The EBITDA margin eliminates the significant non-cash

expenses of depreciation and amortization along with
interest and taxes:
EBITDA =
Earnings before interest, taxes, depreciation, and amortization
Sales

Presentation title

35

EBIT and EBITDA-BP

Dec 31, 2014
Profit (loss) for the year
attributable to BP
shareholders

Dec 31, 2013

Dec 31, 2012

Dec 31, 2011

Dec 31, 2010

3,780

23,451

11,582

25,700

(3,719)

Add: Net income

attributable to
noncontrolling interest

223

307

234

397

395

Add: Income tax

expense
Earnings before tax
(EBT)
Add: Finance costs

947

6,463

6,993

12,737

(1,501)

4,950

30,221

18,809

38,834

(4,825)

1,148

1,068

1,125

1,246

1,170

Earnings before
interest and tax
(EBIT)

6,098

31,289

19,934

40,080

(3,655)

Add: Depreciation,
depletion and
amortization

15,163

13,510

12,481

11,135

11,164

Earnings before
interest, tax,
depreciation and
amortization (EBITDA)

21,261

44,799

32,415

51,215

7,509

Presentation title

36

Oil and Gas Industry: EBITDA margin comparison

Asset management ratios

Asset management is a key indicator of how effective a firms

management is.

Asset turnover may be broken into two primary components:

1. Working capital management
2. Long-term asset management

Working Capital Management

Working capital is the difference between current assets and current liabilities.
Operating working capital is defined as (Current assets - cash) - (current
liabilities - short term debt).
Key ratios useful for analyzing the management of working capital include:

Working capital turnover = Operating revenue / operating working capital.

Working capital to revenue = Operating working capital / operating revenue.
Inventory turnover = Operating revenue / current inventory.
Days payable = (Creditors / operating revenue) * # days in financial year.
Days receivables = (Debtors / operating revenue) * # days in financial year
Days inventory = (Current inventory / operating revenue) * # days in financial
year

Inventory Turnover-BP
Dec 31, 2014

Dec 31, 2013

Dec 31, 2012

Dec 31, 2011

Dec 31, 2010

Selected Financial Data (USD $ in millions)

Cost of operating revenues

309,282

325,878

327,153

309,763

280,826

18,373

29,231

27,867

25,661

26,218

16.83

11.15

11.74

12.07

10.71

Chevron Corp.

22.28

24.97

26.58

30.95

24.70

ConocoPhillips

23.30

25.03

33.19

42.46

28.17

Exxon Mobil Corp.

16.00

17.64

20.88

20.42

18.01

Royal Dutch Shell PLC

18.14

12.72

12.87

13.68

10.48

Inventories
Ratio
Inventory turnover1
Benchmarks
Inventory Turnover, Competitors

Inventory Turnover, Sector

Receivable Turnover-BP
Dec 31, 2014

Dec 31, 2013

Dec 31, 2012

Dec 31, 2011

Dec 31, 2010

Selected Financial Data (USD $ in millions)

Sales and other
operating revenues
Trade receivables

353,568

379,136

375,580

375,517

297,107

19,671

28,868

25,977

27,929

24,255

17.97

13.13

14.46

13.45

12.25

Ratio
Receivables
turnover1
Benchmarks
Receivables Turnover, Competitors
Chevron Corp.

11.98

10.18

10.98

11.21

9.55

ConocoPhillips

7.87

6.58

6.49

16.71

13.74

Exxon Mobil Corp.

21.26

16.19

15.97

15.54

14.55

Royal Dutch Shell

PLC

14.83

11.54

11.62

9.73

9.83

15.79

12.32

12.73

12.63

11.69

Receivables Turnover, Sector

Integrated Oil &
Gas

Presentation title

41

Long-term Assets Management

Invested capital turnover = Operating revenue /

operating invested capital before goodwill.
Long term asset turnover = Operating revenue / non
current assets
PPE turnover = Operating revenue / (property, plant &
equipment - accumulated depreciation).

Fixed Asset Turnover-BP

Dec 31, 2014

Dec 31, 2013

Dec 31, 2012

Dec 31, 2011

Dec 31, 2010

Selected Financial Data (USD $ in millions)

Sales and other
operating revenues
Property, plant and
equipment

353,568

379,136

375,580

375,517

297,107

130,692

133,690

120,448

119,214

110,163

2.71

2.84

3.12

3.15

2.70

Ratio
Net fixed asset
turnover1
Benchmarks
Net Fixed Asset Turnover, Competitors
Chevron Corp.

1.09

1.34

1.63

1.99

1.90

ConocoPhillips

0.70

0.75

0.86

2.91

2.29

Exxon Mobil Corp.

1.56

1.73

2.00

2.18

1.85

Royal Dutch Shell

PLC

2.19

2.35

2.71

3.09

2.58

1.89

2.18

2.60

2.23

Net Fixed Asset Turnover, Sector

Integrated Oil & Gas

Presentation title

1.70

43

Equity Turnover-BP
Dec 31, 2014

Dec 31, 2013

Dec 31, 2012

Dec 31, 2011

Dec 31, 2010

Selected Financial Data (USD $ in millions)

Sales and other
operating revenues
Total BP
shareholders' equity

353,568

379,136

375,580

375,517

297,107

111,441

129,302

118,414

111,465

94,987

3.17

2.93

3.17

3.37

3.13

Chevron Corp.

1.29

1.48

1.69

2.01

1.89

ConocoPhillips

1.01

1.04

1.21

3.75

2.76

Exxon Mobil Corp.

2.26

2.42

2.73

3.02

2.52

Royal Dutch Shell

PLC

2.45

2.51

2.48

2.77

2.49

2.14

2.23

2.41

2.90

2.53

Ratio
Equity turnover1
Benchmarks
Equity Turnover, Competitors

Equity Turnover, Sector

Integrated Oil &
Presentation titleGas

44

Debt and safety ratios (financial leverage analysis)

Borrowing allows a firm to access to capital, but increases the

risk of ownership for equity holders
Analysis of leverage can be performed on both short- and longterm debts:
Liquidity analysis relates to evaluating current liabilities
Solvency analysis relates to longer term liabilities

Liquidity analysis

There are several ratios useful to evaluate a firms liquidity,

including:
Current ratio
Quick ratio
Cash ratio
Operating cash flow ratio
Each of these ratios attempts to measure the ability of a firm to
pay its current obligations

Liquidity analysis
Knowing how the liquidity ratios are calculated allows the user to
understand how to interpret them:
Current ratio = Current assets
Current liabilities
Quick ratio = Cash + Short-term investments + Accts. receivable
Current liabilities
Cash ratio = Cash + Marketable securities
Current liabilities
Operating cash flow ratio = Cash flows from operations
Current liabilities

Current Ratio-BP
Dec 31, 2014

Dec 31, 2013

Dec 31, 2012

Dec 31, 2011

Dec 31, 2010

Selected Financial Data (USD $ in millions)

Current assets

87,262

96,840

110,981

97,584

96,853

Current liabilities

63,615

72,812

77,586

84,318

83,879

1.37

1.33

1.43

1.16

1.15

Chevron Corp.

1.32

1.52

1.63

1.58

1.68

ConocoPhillips

1.31

1.26

1.38

1.08

1.26

Exxon Mobil Corp.

0.82

0.83

1.01

0.94

0.94

Royal Dutch Shell

PLC

1.16

1.11

1.18

1.17

1.12

1.15

1.15

1.27

1.15

1.16

Ratio
Current ratio1
Benchmarks
Current Ratio, Competitors

Current Ratio, Sector

Presentation title

Integrated Oil & Gas

48

Quick Ratio-BP
Dec 31, 2014

Dec 31, 2013

Dec 31, 2012

Dec 31, 2011

Dec 31, 2010

Selected Financial Data (USD $ in millions)

Loans

333

216

247

244

247

Trade receivables

19,671

28,868

25,977

27,929

24,255

Other receivables

11,367

10,963

11,687

15,597

12,294

Other investments

329

467

319

288

1,532

Cash and cash

equivalents
Total quick assets

29,763

22,520

19,548

14,067

18,556

61,463

63,034

57,778

58,125

56,884

Current liabilities

63,615

72,812

77,586

84,318

83,879

0.97

0.87

0.74

0.69

0.68

Chevron Corp.

0.94

1.16

1.25

1.25

1.30

Presentation title
ConocoPhillips

1.03

0.99

0.78

0.82

1.00

Ratio
Quick ratio1
Benchmarks
Quick Ratio, Competitors

49

Cash Ratio-BP
Dec 31, 2014

Dec 31, 2013

Dec 31, 2012

Dec 31, 2011

Dec 31, 2010

Selected Financial Data (USD $ in millions)

Other investments

329

467

319

288

1,532

Cash and cash

equivalents
Total cash assets

29,763

22,520

19,548

14,067

18,556

30,092

22,987

19,867

14,355

20,088

Current liabilities

63,615

72,812

77,586

84,318

83,879

0.47

0.32

0.26

0.17

0.24

Chevron Corp.

0.41

0.50

0.64

0.60

0.59

ConocoPhillips

0.44

0.43

0.25

0.23

0.42

Exxon Mobil Corp.

0.07

0.07

0.15

0.17

0.13

Royal Dutch Shell

PLC

0.25

0.10

0.19

0.11

0.13

Ratio
Cash ratio1
Benchmarks
Cash Ratio, Competitors

Presentation title

Cash Ratio, Sector

50

Debt and Safety Ratios

Beyond short-term survival, solvency measures the ability of a firm to
meet long-term obligations
Several useful ratios are used to analyse solvency. Three using only
shareholders equity as a denominator are:
Financial leverage = Total assets / shareholders equity
Gross gearing = (Short term debt + long term debt) / shareholders
equity
Net gearing = (Short term debt + long term debt - cash) /
shareholders equity

Sustainable Growth Ratio

A comprehensive measure of a firms ratios is the sustainable growth
rate, which uses ROE:

ROE * (1 - Dividend payout ratio)

Where:
Dividend payout ratio = Cash dividends paid
Net income
Sustainable growth rate measures the ability of a firm to maintain its
profitability and financial policies

Sustainable Growth Ratio

Cash Flow Analysis

Cash flow analysis can provide further insights into operating,
investing and financing activities

The analysis focuses on the financial ability of a company to

pay the outgoings according to a priority list
1. Interest payments
2. Repayment of loans
3. Capital expenditures
4. Dividend payments

Cash Flow Analysis

Note that interest expense and dividends paid are related to

financing activities.
Interest income and dividends received are related to
investing activities.
That is, for our purposes, these items should not be
included in the operating activities of a company.

Cash Flow Analysis

So, the first task in cash flow analysis is to rearrange the
classifications in the cash flow statement , if required.
That is, operating cash flow section should include only
operating activities.
Add back interest and dividends paid, to the operating cash
flow.
Deduct interest and dividend received, from operating cash
flows.
Cash flow analysis starts by looking at cash flow from
operations and comparing it with NPAT

Cash Flow Analysis

Is there sufficient operating cash flows to meet interest
payments?
If yes, how many times?
If no, the company is in trouble!

Is there sufficient operating cash flows after interest payments

to pay cash dividends?
If yes, how many times?
If no, how does this affect share prices?
Should the company borrow to pay dividends?

Is there sufficient cash flows to repay loan principal?

Is it feasible to borrow to do so?
What is the interest rate on the new borrowings?

Is there sufficient cash flows to expand?

Is it a good idea to use our own funds to expand?

Financial Statement Analysis and Public Debt

Debt ratings provide important information to investors (Moodys
and S&P)
The meaning of debt ratings:

Standard & Poors has a rating system from D to AAA that

grades the relative riskiness of debt
Debt ratings influence the yield that debt instruments must pay
for investors to buy them.

Table 10.2: Debt Ratings - Example

Table 10.3: Median Financial

Ratios by Debt Ratings Category

Financial Analysis and Public Debt

Factors that drive debt ratings:

Performance measures are used to gauge the expected future health of
the firm and the ability to repay debt.
Credit analysis (debt and safety ratio)

Factors Used in Quantitative Models of Debt Ratings

Prediction of Distress and Turnaround

Models for distress prediction
Debt of distressed companies present investment opportunities because they trade at steep
discounts. (e.g. Australian Vintage, Photon Group)
Financials can be analyzed to predict distress (e.g. Allied Brands)
Several models to predict distress have been developed over the years. One of the more popular and
robust models is the Altmans Z-score model:

Altman z-score

The Altman z-score is a measure of a company financial strength that

uses a weighted sum of several factors.
Distress zone will differ across industries and types of companies

Zones of Discrimination:
Z > 2.99 -Safe Zones
1.81 < Z < 2.99 -Grey Zones
Z < 1.81 -Distress Zones

Your Project
Section

Financial

Analysis
Profitability

Many of the ratios are available in Osiris. Identify the more important ones.

analysis

Merely stating the ratios will not fetch marks. A brief discussion on key ratios is

500

100

100

100

100

100

required. Comparison against peer and industry is important (both time series
and cross sectional).
Asset

Many of the ratios are available in Osiris. Identify the more important ones.

management

Merely stating the ratios will not fetch marks. A brief discussion on key ratios is

analysis

required. Comparison against peer and industry is important (both time series
and cross sectional).

Debt and safety

Many of the ratios are available in Osiris. Identify the more important ones.

analysis

Merely stating the ratios will not fetch marks. A brief discussion on key ratios is
required. Comparison against peer and industry is important (both time series
and cross sectional).

Cash Flow

Many of the cash flow ratios are available in database. Identify the more

Analysis

important ones. A brief discussion on the companys cash flow position is

required. Comparison against peer and industry is important (both time series
and cross sectional).

Credit analysis

Include credit ratings for your company from credit rating agencies (if any).
Conduct the distress analysis and measure Altmans Z score across two recent
years.

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Forecasting