Session 1

Financial Statement Analysis

By : Charlie
Overview of Financial
Statement Analysis

1
CHAPTER
Pengertian Analisis Laporan Keuangan

• Analisis laporan keuangan adalah kegiatan mengidentifikasi, menilai

dan membandingkan laporan keuangan pada tahun berjalan dengan
tahun sebelumnya.
• Analisa laporan keuangan adalah proses pengkajian dan penafsiran
informasi yang terdapat dalam laporan keuangan suatu perusahaan
untuk memahami kinerja finansialnya.
Tujuan Analisis Laporan Keuangan

• Tujuan utama dari analisis laporan keuangan adalah untuk

memberikan wawasan yang lebih mendalam tentang kesehatan
finansial dan stabilitas perusahaan, serta membantu para pemangku
kepentingan dalam pengambilan keputusan yang informasi.
• Bagi manajemen dan investor, analisis laporan keuangan sebuah
perusahaan bisa memberikan penilaian sebelum menentukan pilihan
investasi ke perusahaan tersebut.
• Dalam hal pinjaman, informasi dari laporan keuangan bisa
menentukan kepastian kesanggupan perusahaan dalam
mengembalikan pinjaman beserta bunga.
• Analisis keuangan bisa mengetahui kemampuan perusahaan melunasi
kewajiban terhadap supplier.
 Business Analysis

Evaluate Prospects Evaluate Risks

Business Decision Makers

Equity investors

Creditors

Managers

Merger and Acquisition Analysts

External Auditors

Directors

Regulators

Employees & Unions

Lawyers
Information Sources for Business Analysis
Quantitative Qualitative

Management discussion & Analysis

Financial Statements

Chairperson’s Letter
Industry Statistics
Press Releases
Economic Indicators
Financial press

Regulatory filings
Vision/Mission Statement

Trade reports Web sites

Financial Statements

Balance Sheet

Income Statement

Statement of Shareholders’
Equity

Statement of Cash Flows

 Credit Analysis Equity Analysis

Management &
Control Labor Negotiations

Types of
Business Director Oversight
Regulation Analysis

Financial External Auditing

Management

Mergers, Acquisitions
& Divestitures
 Credit Analysis
Creditors

Trade Creditors Non-trade

Creditors

Provide goods Bear risk of Provide major Bear risk of

or services default financing default

Most short- Usually implicit Most long- Usually explicit

term interest term interest
 Credit Analysis
Credit worthiness: Ability to honor credit obligations
(downside risk)

Liquidity
Ability to meet short-term
obligations
Focus:
• Current cash flows
• Make up of current
assets and liabilities
• Liquidity of assets
Solvency
Ability to meet long-term
obligations
Focus:
• Long-term profitability
• Capital structure
 Equity Analysis
Assessment of downside risk and upside potential

Technical analysis / Charting Fundamental Analysis

• Patterns in price or volume Determine Intrinsic value
history of a stock without reference to price
• Predict future price • Analyze and interpret key
movements factors
• Economy
• Industry
• Company
Component Processes of
Business Analysis

Business
Environment &
Strategy Analysis

Industry Strategy
Analysis Analysis

Financial
Analysis

Analysis
Accounting of cash Prospective
Analysis flows Risk
Analysis
Profitability
Analysis Analysis

Cost of Capital Estimate Intrinsic Value

 Accounting Analysis

Process to evaluate and adjust financial

statements to better reflect economic reality

Comparability problems — across firms and across time

Manager estimation error

Distortion problems Earnings management Accounting

Risk
Accounting Standards
Financial Analysis

Process to evaluate financial position and

performance using financial statements

Profitability analysis — Evaluate return

on investments Common tools

Risk analysis ——— Evaluate riskiness

& creditworthiness Cash
Ratio
flow
analysis
analysis
Analysis of — Evaluate source &
cash flows deployment of funds
Prospective Analysis

Process to forecast future payoffs

Business Environment
& Strategy Analysis

Accounting Analysis

Financial Analysis

Intrinsic Value
Dynamics of Business Activities
Business Activities Time
Beginning of period
Investing Financing
Planning

Operating

Planning
Investing Financing
End of period
 Business Activities
Competition Pricing

Market demands Tactics

Planning
Activities:
Distribution Goals Promotion
& Objectives
Projections
Managerial performance

Opportunities Obstacles
Business Activities

Financing activities
• Owner (equity)
• Nonowner (liabilities)

Financing
 Business Activities

Investing activities
• Buying resources
• Selling resources

Investing Financing

Investing = Financing
 Business Activities
Planning
Investing Activities Financial
Activities Activities

Operating Activities
Revenues and expenses from providing
goods and services
Financial Statements Reflect Business Activities

Planning
Investing Financing
Current: Operating Current:
•
Cash
•
Notes Payable
•
Sales
•
Accounts Receivable
•
Accounts Payable
•
Cost of Goods Sold
•
Inventories
•
Salaries Payable
•
Selling Expense
•
Marketable Securities
•
Income Tax Payable
•
Administrative Expense
Noncurrent: •
Interest Expense
Noncurrent:
•
Land, Buildings, & •
Income Tax Expense
•
Bonds Payable
Equipment
•
Common Stock
•
Patents
•
Retained Earnings
•
Investments
Net Income

Liabilities & Equity

Income statement
Assets Cash Flow Balance Sheet

Balance Sheet Statement of Statement of

Cash Flows Shareholders’ Equity
1-24
 Balance Sheet

Total Investing = Total Financing

= Creditor Financing + Owner Financing

Colgate Financing
(in $billions)
$9.138 = $7.727 + $1.410
1-26
Income Statement
Revenues – Cost of goods sold = Gross Profit
Gross profit – Operating expenses = Operating Profit

Colgate’s Profitability
(in $billions)

$12.238 - $5.536 = $6.701 Gross Profit

$6.701 - $4.5411 = $2.160 Operating profit
1-28
Statement of Cash Flows

Net Cash Flows from Operating

Activities

Net Cash Flows from Investing

Activities

Net Cash Flows from Financing

Activities
1-30
Additional Information
(Beyond Financial Statements)

Management’s Discussion & Analysis (MD&A)

Management Report
Auditor Report
Explanatory Notes to Financial Statements
Supplementary Information
Proxy Statement
 Analysis Preview
Yr1 Yr2 Yr3
Comparative Analysis

Purpose: Evaluation of consecutive

financial statements
Output: Direction, speed, & extent of any trend(s)
Types:  Year-to-year Change Analysis
 Index-Number Trend Analysis
 1-33

Analysis Preview
Metode analisa laporan keuangan horizontal
Metode analisa laporan keuangan horizontal
Analysis Preview
Common-Size Analysis
Purpose :  Evaluation of internal makeup
of financial statements
 Evaluation of financial statement
accounts across companies
Output: Proportionate size of assets,
liabilities, equity, revenues, & expenses
Analysis Preview
Analysis Preview
Analysis Preview
Ratio Analysis
Purpose : Evaluate relation between two or more
economically important items (one
starting point for further analysis)
Output: Mathematical expression of relation
between two or more items
Cautions:  Prior Accounting analysis is important
 Interpretation is key - long vs short
term & benchmarking
Analysis Preview
Valuation
Valuation - an important goal of many types
of business analysis

Purpose: Estimate intrinsic value of a

company (or stock)
Basis: Present value theory (time value of
money)
Analysis Preview
Debt (Bond) Valuation

Bt is the value of the bond at time t

It +n is the interest payment in period t+n
F is the principal payment (usually the debt’s face value)
r is the investor’s required interest rate (yield to maturity)
Analysis Preview
Equity Valuation

Vt is the value of an equity security at time t

Dt +n is the dividend in period t+n
k is the cost of capital
E refers to expected dividends
Analysis Preview
Equity Valuation - Free Cash Flow to Equity
Model

FCFt+n is the free cash flow in the period t + n [often

defined as cash flow from operations less capital
expenditures]
k is the cost of capital
E refers to an expectation
Analysis Preview
Equity Valuation - Residual Income Model

BV is the book value at the end of period t

t

Rit+n is the residual income in period t + n [defined as

net income, NI, minus a charge on beginning
book value, BV, or RIt = NIt - (k x BVt-1)]
k is the cost of capital
E refers to an expectation
Analysis in an Efficient Market
Three assumed forms of market efficiency

Weak Form - prices reflect information in

past prices
Semi-strong - prices reflect all public
Form information
Strong Form - prices reflect all public and
private information
Book Organization
Financial Statement Analysis

Part I Part II Part III

Introduction and Overview Accounting Analysis Financial Analysis

Chapter 3: Analyzing Chapter 7: Cash Flow

Chapter 1: Overview of Analysis
Financial Activities
Financial Statement Chapter 8: Return on
Chapter 4: Analyzing
Analysis Invested Capital
Investing Activities
Chapter 5: Analyzing Chapter 9: Profitability
Chapter 2: Financial Analysis
Investing Activities:
Reporting and Chapter 10: Prospective
Special topic
Analysis Analysis
Chapter 6: Analyzing
Chapter 11: Credit
Operating Activities Analysis
Chapter 12: Equity
Analysis and Valuation