Financial Performance

Financial Statements

Income Statement
The income statement includes information on the following four activities: (1) Sales, (2) Production Costs, (3) Marketing and Distribution Costs, and (4) Financing Costs
Balance Sheet
The balance sheet includes information on the following three categories: (1) Current Assets, (2) Fixed or Long-Term Assets, and (3) Other Assets.
Cash Flow Statement
Cash Flow Statements include: (1) Cash Flow from Operations, (2) Investment Flows, and (3) Financing Transactions.

Financial Ratios

Financial ratios restate the data from the financial statements in relative terms. This restatement allows the corporate ratios to be examined across time to identify trends; it also allows the corporation's ratios to be compared to other corporations' ratios or to industry ratios. Information on corporate and industry ratios is provided by firms such as Dun & Bradstreet and Robert Morris Associates.   Selected data is also available in the Wall Street Journal Briefing Books.

The financial ratios can be categorized as follows:

Liquidity
Liquidity measures are designed to indicate the firm's ability to meet debt and other obligations.
Profitability
Profitability measures are designed to indicate how efficient the firm is in generating profits from it assets.
Financial Leverage
The finance measure is designed to indicate how levered the firm is.
Return on Equity
The return on equity measure is designed to indicate how well investors are doing relative to other stock.

Modified Du Pont Analysis

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