Tuesday, 7 March 2017

Methods and Techniques of analysis of financial statements

financial statements

The company is to increase the level of profit, because it is the ability to pay for the entire debt obligations either short term debt and if the company is liquidated / dissolved. If the company is unable to pay off the debts when the whole liquid is dissolved then the company is said to be in a state of solvable. But when the company was unable to pay off the debts either short term or long term if liquidated, then the company was said to be in a state of insolvency or not solvable.


Solvency of a company can be known through the balance sheet of the company concerned and the calculation of the solvency at the level of having regard to the structure of capital owned company i.e. debt short term and long term.

The total assets of a company is the sum of all assets owned by the company, which is present on the debit side of a balance sheet or on the top of a debit. It should be noted, that in in capital, not taken into account these assets assets which is in material (not real), while the total debt in a company are a number of corporate debt, both short term debt as well as long-term debt.

Net worth is the number of private equity-owned companies that covers capital, shares, reserves, surplus and others. Other net worth is the difference between the amount of debt the company reduced by total assets. While net worth to debt ratio is normal is 100% which means that the amount of debt in the same amount of its own capital.


Measuring the company's achievements, analysis of profitability/earning ratios is one of the tools used by managers. On the principle that every company wants a good achievement so it will give an overview of the extent to which results have been achieved. Analysis of ratio of profitability will also provide an overview of the efficiency of the use of the Fund, regarding the profitability of the results will be after comparing the net income after tax and interest with property.

For details regarding the profitability then can be seen the opinions of experts. The defines the earning ratios as follows: earning ratios is the company's ability to generate the advantages compared with the capital used and expressed with percent.

Furthermore, It posited that the earning ratios measured by the success of an enterprise in maintaining the dividend wisdom can be profitable while at the same time being able to shows that there is an increase in capital of stable and steady.

Measurement of profitability

Thus the measurement of profitability by using the ratio of profitability is intended to measure the ability of the company's activity to generate profit.

The defines the ratio-ratio of profitability as follows: Ratio of profitability IE the ratio-ratio that shows the end result of a number of wisdom and the decision.

From the explanation and definition presented the experts then a conclusion that can be drawn is the earning ratios are achieved a firm percentage expressed in percentage, after comparing the results between achieved with the essence of capital is used. The larger the percentage over the comparison the higher financial accomplishments are achieved for these companies, and vice versa.

By knowing the earning ratios achieved by a company this will give an overview of the extent to which efficiency and effectiveness achieved the company over the use of those funds.

For the calculations of the size, measure the profitability of sales to generate profits that accrue to the company are:

A. Gross profit margin is the profit ratio

(profitability ratios), this ratio can be measured efficiently the gross profit that can be generated from each sale of dollar which means each sale generates a gross profit of the comparison results.

For gross profit margin is to compare the gross profit (net sales-COGS or cost of goods) and net sales in the same period, with the following formulation:
Gross profit

-Gross Profit Margin = x 100%
                                                   Net Sales

High low gross profit margin is influenced by the high to the low sales and cost of goods sold.

B. The Operating profit margin was making every effort to generate sales operating profit (operating profit).

Operating profit margin calculated by compare net profit with net sales (after deducting the cost of sales, General and Administration).

This ratio can measure the efficiency of the operating net profit from every sale of rupiah in other words operating profit before interest and taxes generated by every rupiah sales generate operating profit of the comparison results.

As for the formulation used to measure it as follows:

Total sales

Operating Profit Margin = x 100%

Operating profit

High sales do not necessarily result in high profit margin and vice versa, but it is affected by the high cost of low-cost operation (cost of sales, General and Administration) and the cost of goods sold of the goods or the service therefore by comparing operating profit margin between several successive periods will be seen the tendency of cost of goods sold and operating expenses of the enterprise change.

No comments:

Post a Comment