Financial Statement- Eko Budi Harto

Financial Statement Analysis

Cash Reinvestment Ratio (CRR)

 

BY:

EKO BUDI HARTO

361 10 024

3a D-3

A.     Financial statement analysis

Financial statement analysis (or financial analysis) is  the process of understanding the risk and profitability of a firm (business, sub-business or project) through analysis of reported financial information, by using different accounting tools and techniques.

B.      Cash Flow Analysis

Cash flow statement is a report about the cash inflow and the cash outflow. In analysing the cash flow, there are 5 financial ratio that can be used, such as :

1.      The ratio of operating cash flow to current liability

         ROCFCL use to measures the likuidity of financial company, specially this ratio measure how much the operating cash flow of the company can cover up the current liability of the company.

2.      The ratio of operating cash flow to total liability

         ROCFTL use to measures the solvability of financial company, specially this ratio measure how much the operating cash flow of the company can cover up the total liability of the company.

3.      The ratio of operating cash flow to total assets

         ROCFTA use to measures the solvability of financial company, specially this ratio measure how much the operating cash flow of the company to fund all of the asset of the company.

4.      cash flow adequacy ratio (CFAR)

         CFAR is an analytical technique that measures how much of the cash from operating activity that available to full fill the capital of the company, include out of capital, investment in inventory, and cash dividen.

5.      cash reinvestment ratio (CRR)

C.     Cash Reinvestment Ratio (CRR)

Cash reinvestment ratio (CRR) is an analytical technique that measures how much of the invesment in assets that describes the operating cash flow is retained and invested back in the company to replace the assets and support the growth of company’s operation.

D.     The formula for calculating Cash Reinvestment Ratio (CRR)

 

Example:

 

E.      Interpretation

Shows that in 2008 , PT United Tractors Tbk and a subsidiary reinvest cash from operations by 17 % to replace assets and support the company’s growth. Whereas in 2009 this company reinvest cash operations by 16%.