Financial Statement-Armayunita

FINANCIAL REPORT ANALYSIS

OPERATING CASH FLOW
TO TOTAL LIABILITIES RATIO

BY

ARMAYUNITA

36110002

ACCOUNTING DEPARTEMENT

POLYTECNIC OF UJUNG PANDANG

2013

A.    FINANCIAL REPORT ANALYSIS

Financial report analysis is a method that can be used in the financial statements users explore information about the company. Financial report analysis helps identify inefficiencies in a company's management as well as taking action to improve the company's performance

B.     OBJECTIVES OF FINANCIAL REPORT ANALYSIS

1. Screening

Analysis is performed by looking analytically financial statements for the purpose of selecting investment or merger possibilities

2. Forecasting

Analysis is used to forecast the company's financial condition in the future.

3. Diagnosis

Analysis is intended to look at the possibility of problems occurring both in operations management, financial or other problems.

4. Evaluation

Analyzes were conducted to assess the performance of management, operational, efficiency etc.

5. Understanding

By doing financial statement analysis, the raw information that is read from the financial statements will become wider and deeper.

C.     THE SCOPE OF FINANCIAL REPORT ANALYSIS

1.      Liquidity Analysis

liquidity analysis is the analysis of the short-term perspective. In general, liquidity analysis is an analysis of the company's ability to meet its short term obligations

2.      Solvency Analysis

solvency analysis is an analysis of the long-term perspective. In general, solvency analysis is an analysis of the ability of the company to meet all its obligations, both short term and long term

3.      Profitability Analysis

profitability analysis is usually called the profitability analysis is an analysis of the company's ability to earn income, either by sale or by investment.

4.      Cash Flow Analysis

cash flow analysis is an analysis of cash flows (cash inflows) and cash outflow (cash outflow).

5.      Risk Analysis

risk analysis is an analysis of the risks faced by the company that would cause the company's financial difficulties and eventually went bankrupt

6.      Bankruptcy Prediction Analysis

banckruptcy prediction analysis is an analysis that can help companies to anticipate the possibility of the company going bankrupt due to financial problems.

7.      Investment Analysis

investment analysis is an analysis of the company's investment plan in the form of securities

D.     CASH FLOW ANALYSIS

Ratio is used by cash flow :

1.      operating cash flow to current liabilities ratio

2.      operating cash flow to total liabilities ratio

3.      operating cash flow to total assets ratio

4.      cash flow adequacy ratio

5.      cash reinvestment ratio

Cash Flow Analysis Approach-Working Capital:

a.       T account Approach

b.      Worksheet Approach

Method from cash flow analysis:

a.      Horizontal Analysis

Horizontal Analysis is a method used to compare the value of each cash flow business activities between two or more periods

b.      Vertikal Analysis

Vertical analysis is a technique or method that compares the cash flow of the company's three business activities for a certain period

c.       Cross-Section Analysis

Cross-section analysis is to conduct a comparative analysis of a company's cash flow is analyzed by another company.

d.      Financial Analysis Ratio

Financial ratios of the company is a technique or method that compares between components in the financial statements of the company .

E.     OPERATING CASH FLOW TO TOTAL LIABILITIES RATIO

operating cash flow to total liabilities ratio is used to measure a company's financial solvency. In particular, this ratio measures how much of the operating cash flow generated to cover the company's entire liability companies, both current liabilities and noncurrent liabilities.

Formula

RKOTK = operating cash flow/ total liabilities

Example

As an illustration used financial statement of PT United Tractors Tbk and Subsidiaries as shown in Table 1.0

Table 1.0 operating cash flow to total liability

YEAR	OPERATING CASH FLOW	TOTAL LIABILITY	RAKOTK
2008	4.253.895	11.644.916	0,37
2009	5.101.022	10.453.748	0,49

F.     ANALYSIS RESULT

Table 1.0 above shows that in 2008, PT United Tractors Tbk and Subsidiaries able to provide cash flow from operating activities amounted to 37% to cover the total liability. While in 2009, the company was able to provide the cash flow from operating activities amounted to 49% to cover the total liability. This indicates that PT United Tractors Tbk and Subsidiaries relatively solvable. Although no standard that can be used to measure the solvency of the cash flow ratio.

G.    CONCLUSION

Operating cash flow to total liabilities ratio is used to measure a company's financial solvency. In particular, this ratio measures how much of the operating cash flow generated to cover the company's entire liability companies, both current liabilities and noncurrent liabilities, The higher this ratio, the more solvent company.