FINANCIAL STATEMENT ANALYSIS

The purpose of this segment is to exemplify how to reorganize and understand information from monetary statements that we have discussed beforehand in this chapter.  Financial ratio provides information about five areas of financial presentation:

1. Financial leverage-the degree to which a firm relies on debt finance

2. Activity-the capability of the firm to control its speculation in property

3. Solvency-the capability of the firm to meet its short-run obligation

4. Profitability-the degree to which a solid is money-making

5. Value-the value of the

Financial statement does not in a straight line supply the previous five measures of presentation. However, management can constantly evaluate how well the firm is doing, and financial statements can make available this kind of useful in sequence. The monetary statements of the Timberland Company, which appear in the previous section, provide the in sequence for the examples that follow. (Values are given in $ millions.)