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Financials Chapter

The Financials Chapter displays a company’s performance and stability data that can be critical when determining credit limits and lending terms. Use this section to access public company financial statements, as well as, the most complete listing of private company financial statements available anywhere.

The following financial information will display: Financial Statement Comparison Graph, Statement Comparison Table, Latest Financial Statement, Statement Information, and Key Business Ratios.

Financial Statement Comparison Panel

The Financial Comparison panel displays a financial statement of a company with important trend data to aid decision making. A comparison of a company's financial statements is provided through a Statement Comparison Graph and Statement Comparison Table.

When you compare two or more successive financial statements of the same concern, a trend becomes apparent. Individual items of the balance sheet and profit and loss statement, compared with identical items on previous statements, can be significantly revealing in decision making. Comparative analysis of a company's financial statement, to its previous results and to industry averages, is essential in assessing its financial health.

This section displays the comparison of a company's financial statements through the following: Statement Comparison Graph, and Statement Comparison Table.

Statement Comparison Graph

The Statement Comparison graph displays a graphical representation of a company's financial statements for the past three years where the graph's set up is as follows: Left Y axis represents Current Liabilities, Current Assets, and Sales. Right Y axis represents the Current Ratio, and the X axis represents the time scale. The body of the graph displays a bar chart of Current Liabilities, Current Assets, Sales, and a trend line to show the Current Ratio using the data available for a company.

Statement Comparison Table

The Statement Comparison Table displays a company's financial statements data in a table, constructed with the following attributes: Total Current Assets, Total Current Liabilities, Total Assets, Total Liabilities, Total Long Term Debt, Tangible Net Worth, Repossession, Sales, and Net Income after Tax.

Latest Financial Statement Panel

The Latest Financial Statement panel displays a company's most recent financial statements such as the Balance Sheet, Profit & Loss, Net worth Reconciliation, Source Information, Audit Information, Interview, and Commentary.

Balance Sheet

The Balance Sheet reports the assets, liabilities, and net worth of a company at a specific point in time.

Assets represent the total resources of a company, which may shrink or increase depending on the results of operations. Assets are listed in liquidity order (ease of converting into cash). Assets include Cash, Accounts Receivable, Inventory, Fixed Assets, and miscellaneous Other. Liabilities include Accounts and Notes Payable, Bank Loans, Deferred Credits, and miscellaneous Other. All businesses divide assets and liabilities into two groups: Current (convertible to cash within a year) and Non-current. Net worth is the owner's investment (in the case of a proprietorship or partnership) or capital stock (original investment) plus earned surplus (earnings retained in the business) in the case of a corporation.

Profit & Loss

The Profit & Loss statement is a detailed computation of the money a business makes or loses over a specific time period. Sales or service income is offset against expenses (operating and production costs). You will most often see year-end statements reflecting income and expenses for a particular calendar year.

Net Worth Reconciliation

Net Worth Reconciliation is the accounting of business deals that increase or decrease the net worth.

Statement Information

Statement information displays where the financial data provided was obtained, through Source Information, Audit Information, Interview Information, and Commentary Information. A company may also add comments on this section to provide an explanation about certain financial statement items.

Key Business Ratios

Key Business Ratios displays a company's financial ratio analysis with the following: Profitability, Short-Term Solvency, Efficiency, and Utilization.

When a banker, credit manager, or investor receives financial information, they conduct a ratio analysis. Ratios are a means of highlighting relationships between financial statement items. There are many ratios which can be complied on any business. Generally, ratios are used for internal analysis of items in a balance sheet; and/or for comparative analysis of a company's ratios at different time periods and in comparison to other firms in the same industry.

Financial Terms

Profitability

Profitability Ratios are used to measure how well a company performs.

Short-Term Solvency

Solvency Ratios are used to measure the financial soundness of a business and how well the company can satisfy its obligations.

Trade Payment

An overview of key trade elements that are an indication of how quickly a company is likely to pay its bills in the future by reviewing its payment patterns with other vendors in the past.

Efficiency

Efficiency Ratios are used to measure the quality of the firm's receivables and how efficiently it utilizes its other assets.

Current Liabilities

Current liabilities are obligations that a business must pay within a year. Generally they are obligations that are due by a specific date, usually within 30 to 90 days of fulfillment. To maintain a good reputation and successful operations, most businesses find they must have sufficient funds available to pay these obligations on time.

Company Profile

Contains detailed information on the history of the company provided, including background on the management team and key principals, details on related companies, registration industry classification, and incorporation information.

Current Assets

Current Assets, also called trading assets, include cash, trade receivables, and inventory. These are items that can be converted to cash within one year or in the normal operating cycle of a business. Also included in this category are any assets held that can be readily turned into cash with little effort, such as government and marketable securities.

Current Ratio

Measures the degree to which current assets cover current liabilities. The higher the ratio, the more likely the company will be able to meet its liabilities. A ratio of 2 to 1 (2.0) or higher is desirable. Calculated as Current Assets ÷ Current Liabilities

Total Current Assets

Sum of all current assets.

Total Current Liabilities

Sum of all current liabilities.

Total Assets

Sum of all assets.

Total Liabilities

Sum of all liabilities.

Total Long Term Debt

Company Obligations that extend beyond the current year.

Tangible Net Worth

A measure of the physical worth of a company, which does not include any value derived from intangible assets such as copyrights, patents and intellectual property. Tangible net worth is calculated by taking a firm's total assets and subtracting the value of all liabilities and intangible assets.

Net Income after Tax

Net income after tax (sometimes called net profit after tax), is the deduction of all expenses directly applicable to the company's operations, including income taxes, deducted from gross profit. Net income after tax measures the operating success of the company. When total expenses exceeds net sales, a minus figure results and a loss has occurred. If there is a surplus (profit greater than 0, it can be added to retained earnings or distributed to owners and stockholders as withdrawals or dividends. When expenses exceed net sales (when a loss occurs), it is charged against net worth and a reduction in the equity accounts occurs.

Gross Profit

Gross profit measures the profitability of a company's production set-up. A successful company's gross profit will cover its costs of doing business with enough left over to produce a net profit. Gross profit is found by subtracting the cost of goods sold from net sales. Cost of goods sold is comprised of those expenses it took to manufacture, purchase merchandise and service customers. The cost of goods sold takes in material costs, labor and factory expenses involved in producing merchandise sold.

Operating Income

The amount of profit realized from a business's operations after taking out operating expenses - such as cost of goods sold (COGS) or wages - and depreciation. Operating income takes the gross income (revenue minus COGS), and subtracts other operating expenses, and then removes depreciation.

Other Income

The term on an earnings report used to represent income from activities other than normal business operations, such as, investment interest, foreign exchange gains, rent income, and profit from the sale of non-inventory assets.

Taxes

Amount paid in taxes

Withdrawals/Dividends

In a partnership or proprietorship, this figure represents withdrawals by the owners of the business. When withdrawals or dividends exceed profits, they diminish net worth. This situation may have an adverse effect on business activities.

Extraordinary Items

Refers to gains or losses in a company's financial statements that are infrequent and unusual.

Depreciation/ Amortization

Amortization is the decrease in value of an intangible asset or assets over time, while depreciation is the decrease in value of a tangible assets or assets over time.

Retained Earnings at Start of Period

The percentage of net earnings not paid out as dividends, but retained by the company to be reinvested in its core business, or to pay debt, at the start of the period.

Return on Sales

This ratio measures the profits after taxes on the year's sales. The higher this ratio, the better prepared the business is to handle downtrends brought on by adverse conditions.

Return on Assets

(ROA) This ratio shows the after tax earnings of assets and is an indicator of how profitable a company is. Return on assets ratio is the key indicator of the profitability of a company. It matches net profits after taxes with the assets used to earn such profits. A high percentage rate will tell you the company is well run and has a healthy return on assets.

Return on Net Worth

This ratio measures the ability of a company's management to realize an adequate return on the capital invested by the owners in the company.

Quick ratio

This ratio, also called "acid test" or "liquid" ratio, considers only cash, marketable securities (cash equivalents), and accounts receivable because they are considered to be the most liquid forms of current assets. A Quick Ratio less than 1.0 implies dependency on inventory and other current assets to liquidate short-term debt.

Current Liabilities to Worth

This ratio indicates the amount due creditors within a year as a percentage of the owners or stockholders investment. The smaller the net worth and the larger the liabilities, the less security for creditors. Normally a business starts to have trouble when this relationship exceeds 80%.

Current Liabilities to Inventory

This ratio shows, as a percentage, the reliance on available inventory for payment of debt (how much a company relies on funds from disposal of unsold inventories to meet its current debt).

Fixed Assets to Worth

This ratio shows the percentage of assets centered in fixed assets compared to total equity. Generally the higher this percentage is over 75%, the more vulnerable a concern becomes to unexpected hazards and business climate changes. Capital is frozen in the form of machinery and the margin for operating funds becomes too narrow for day-to-day operations.

Collection Period Days

The Number of days it takes to collect payments from customers.

Sales to Inventory

Sales inventory ratio provides a yardstick for comparing stock-to-sales ratios of a business with others in the same industry. When this ratio is high, it may indicate a situation where sales are being lost because a concern is understocked and/ or customers are buying elsewhere. If the ratio is too low, this may show that inventories are obsolete or stagnant.

Sales to Net Working Capital

Sales to net worth capital ratio measures the number of times working capital turns over annually in relation to net sales. A high turnover can indicate over trading (an excessive sales volume in relation to the investment in the business). This ratio should be reviewed in conjunction with the assets to sales ratio. A high turnover rate might also indicate that the business relies extensively upon credit granted by suppliers or the bank as a substitute for an adequate margin of operating funds.

Accounts Payable to Sales

The accounts payable to sales ratio measures how the company pay its suppliers in relation to the sales volume being transacted. A low percentage would indicate a healthy ratio.

Total Liabilities to Worth

Total liabilities to net worth shows how all of the company's debt relates to the equity of the owners or stockholders. The higher this ratio, the less protection there is for the creditors of the business.

Assets to Sales

Assets to sales ratio measures the percentage of investment in assets that is required to generate the current annual sales level. If the percentage is abnormally high, it indicates that a business is not being aggressive enough in its sales efforts, or that its assets are not being fully utilized. A low ratio may indicate a business is selling more than can be safely covered by its assets.