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Assessing Financial Information

Assessing Financial Information. Statistics & Risk Management. Two Main Sources. Internal Finance Department Accounting Department External News Media Universities Government . Technology. Computerized Financial Accounting Systems. Web Browser Based Markets & Brokers.

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Assessing Financial Information

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  1. Assessing Financial Information Statistics & Risk Management

  2. Two Main Sources • Internal • Finance Department • Accounting Department • External • News Media • Universities • Government

  3. Technology Computerized Financial Accounting Systems. Web Browser Based Markets & Brokers. Hand-Held Delivery Systems. TV and Radio Delivery Systems

  4. Preliminary Assessment • Consider the Source. • Consider the Objective. • Consider the Audience. • Look beyond the conclusions and examine the data! • How does it apply to you? • Is an Action necessary? • Are procedural or policy changes needed?

  5. Cynics Look at Sample Size and Selection Gathering Methodologies Analysis Methodologies Incomplete Data Picture Misleading Conclusions

  6. Assessment Ratios • Profitability Ratios measure the profitability of the organization. • Gross profit margin • Operating profit margin • Net profit margin • Return on assets (ROA) • Return on equity (ROE)

  7. Assessment Ratios • Liquidity Ratiosmeasure the organizations ability to meet short-term obligations. • Current ratio • Quick ratio

  8. Assessment Ratios • Debt Ratios measure the amount of debt an organization is using and the ability of the organization to pay off the debt. • Total assets ratio • Times interest earned ratio

  9. Assessment Ratios • Asset Activity Ratios measure how efficiently the company is using its assets. • Average collection period ratio, • Inventory turnover ratio, and • Total asset turnover ratio.

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