A. Defenision Analysis Of Financial Reports
Analysis of the financial statements is the method used to analyze the company's financial position or performance in the future and compare financial performance between companies in the same industry as well as evaluate the tendency of company operations during some periods.
Analysis of financial reports to help management identify the deficiency (in-efficiency) in the company and take action to improve the performance of the company. Business analysis is the analysis of the financial statements is useful in business decision making taken by financial managers, such as whether investing in equity or debt securities, would increase the credit through loans short term or long term, and other business decisions. Analysis of financial statements is not only useful for financial managers but also all interested parties (stakeholders) in the company.
B. The Scope Analysis Financial Report.
a. Liquidity Analysis
liquidity analysis is an analysis of the company's ability to meet short-term liabilities, that is working capital analysis and operating activity analysis of liquidity.
b. solvency Analysis
solvency analysis is an analysis of the company's ability to meet all liabilities, both short term and long term that is capital structure analysis and earnings coverage analysis.
c. profitability analysis
Profitability analysis is also called analysis of earning ratios is an analysis of the company's ability to obtain a profit, whether based on sales or based on investment. That is revenue analysis, cost of sales analysis, and expenses analysis.
d. Cash Flow Analysis
cash flow analysis is the analysis statement in cash inflow and cash outflow. On this analysis will be elaborated about where the sources of the cash acquired the company and where the cash used by the company.
e. Banckruptcy Prediction Analysis
Bankruptcy prediction analysis is an analysis that can help a company to anticipate possible company bankruptcy caused by financial problems. the approach in the prediction of bankruptcy, both Univariate method and multivariate method.
C. Defenition Erning Per Share (EPS)
EPS is profitibilitas rate analysis tool the company uses the concept of a conventional profit. EPS used to evaluate the common stock in addition to PER (Price Earning Ratio) in financial circles. EPS or earnings per shares is the net profit rate for each sheet is wholly capable earned the company at the time of running operations. Earnings per share or EPS sheets in getting from profit available to common shareholders divided by average common shares outstanding.
Earnings per share valuing the acquired net income per common shares. One of the reasons investors buy stocks is to get the dividend, earnings per share if the value is small then it is also possible for small companies to distribute dividends. It can be said the investors will be more interested in stocks that have earnings per share higher than stocks that have earnings per share.
the formula used to determine a company's EPS is as following :
Net Income − Dividends on Preferred Shares
Earnings per Share (EPS) = -----------------------------------------------------------------------------
Weighted Average Number of Common Shares Outstanding
Earnings per share is calculated on annual basis i.e. annual net income and preferred stock dividends are used in the formulas. The use of weighted average common shares outstanding delivers accurate result however, just a simple average, or the number of common share outstanding at the end of the year can also be used instead of weighted average figure for simplicity.
D. For Example Of The Calculation Of Financial Statements
Company A paid dividend of $235,100 during the year ended December 31, 2010 and its weighted average common shares outstanding were 200,000 during the year. There were no preferred stock outstanding and preferred stock dividend. Calculate the EPS of company A.
Answer to question :
235,000 – 0
EPS = -------------------
EPS (2010) = 1.18
To interpretation : based on the results of the above calculation of EPS company A of 1.2 or 12 percent in 2010.
EPS is a profitibilitas company-level analysis tool that uses a conventional income concept. earnings per share valuing the acquired net income per common stock. earnings per share will increase if the percentage increase in profit for the white garment is greater than the percentage increase in the number of shares of common stock outstanding.