Financial Statement- Shely

Final Test (Financial Statement)

Presenter: A. Nur Shely F. T. (36110011)

A.      What is Financial Statement Analysis?

Analysis of the financial statements can be interpreted as an interpretation of a company's financial statements. Some definitions of financial statement analysis is described as follows:

1.      Financial statement analysis is a method that can be used in the financial statements users explore information about the company.

2.       Financial analysis using financial statements to analyze a company's financial position and performance, and to assess the financial performance of the company in the future.

3.      Financial statement analysis helps to compare financial performance among companies in the same industry as well as evaluating the company's operating trend over several periods.

4.      Financial statement analysis helps management identify inefficiencies in the company and take action to improve the company's performance.

B.       Methods of financial statement analysis?

There  are 8 methods to analys the financial statement:

1.      Business analysis
Analyzing a company's business activity is the first step to see the company's business activities relating to corporate finance functions.
In general there are three types of business activities relating to the finance function of a company that is financing activities, investment activities, and operating activities. The third business activity is of course implications for the financial functions of the company are contained in the company's financial statements.

2.      Liquidity analysis is used to measure a company's financial position in the short term. Liquidity aspects including the critical issue for the company because it can result in companies having operations disorder may even result in the company having financial difficulties that ultimately led to bankruptcy.

3.      Solvency analysis is an analysis of the company's ability to meet all its obligations, both short-term liabilities and long term liabilities. This analysis includes the analysis of the two analyzes capital structure and earnings coverage. Both of these analyzes illustrate the level of financial risk and the company's ability to meet its financial payments for funding that has been done.

4.      Profitability analysis is an analysis of the operating performance of a company against the company's ability to generate earnings.

5.      Analysis of Cashflow

6.      risk analysis

7.       analysis bankruptcy

8.      investment analysis.

In this case, i’m going to explain to you about Analysis of Cash Flow to Debt.

Corporate cash flows shows the sources and uses of cash in a company. Therefore, the company's cash flow consists of components of cash inflows and cash outflows. Cash flow position of a company can be in the form of surplus or deficit. Surplus cash flow means that there is excess cash inflows over cash outflows and cash flow deficit otherwise it means there is excess cash outflow over inflow. Cash inflows can be sourced from the company's operating activities, such as product sales, investing activities, such as the sale of fixed assets, financing activities, such as the results of long-term loans.

Sources and uses of cash can be grouped into three types of business activities, namely operating activities, investing activities, and financing activities.

In connection with cash flow analysis, there are two ratios that can be used:

1.      The ratio of operating cash flow to current liabilities
The ratio of operating cash flow to current liabilities is used to measure a company's financial liquidity. In particular, this ratio measures how much of the operating cash flow generated to cover the company's current liabilities of the company. The higher this ratio, the more liquid the company.

To calculate the ratio of operating cash flow to current liabilities (ROCCL), we can use this kind of formula:

To explain this ratio, it is used as an illustration of the financial data of PT Unilever Tbk and its subsidiaries in 2009 and 2010 as shown in the table below:

Year	Net Operating Cash Flow (Rp.in billion)	Current Liabilities (Rp. in billion)	ROCCL
2009	4.253.895	7.874.135	0,54
2010	5.101.022	7.225.966	0,71

Sources: Appendix 1. The financial statements of PT Unilever Tbk and Subsidiaries

The table shows that in 2009, PT Unilever  Tbk and Subsidiaries able to provide cash flow from operating activities amounted to 54% to cover current liabilities. While in 2010, the company was able to provide the cash flow from operating activities amounted to 71% to cover current liabilities. This indicates that PT  Unilever and Subsidiaries relatively illiquid. Although no standard that can be used to measure the liquidity of the cash flow ratio.

2.      The ratio of operating cash flow to total liabilities
The ratio of operating cash flow to total liabilities 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.

To calculate the ratio of operating cash flow to total liabilities (RACTL), we can use this kind of formula:

To explain this ratio, it is used as an illustration of the financial data of PT Unilever Tbk and its subsidiaries in 2009 and 2010 as shown in the table below:

Year	Net Operating Cash Flow (RP. in billion)	Total Liabilities (Rp. in Billion)	RACTL
2009	4.253.895	11.644.916	0,37
2010	5.101.022	10.453.748	0,49

Sources: Appendix 1. The financial statements of PT Unilever  and Subsidiaries

The table above shows that in 2009, PT Unilever and Subsidiaries able to provide cash flow from operating activities amounted to 37% to cover the total liability. While in 2010, the company was able to provide the cash flow from operating activities amounted to 49% to cover the total liability. This indicates that PT Unilever and Subsidiaries relatively solvable. Although no standard that can be used to measure the solvency of the cash flow ratio.