1、McGraw-Hill/Irwin Copyright 2009 by The McGraw-Hill Companies,Inc.All rights reserved.Chapter 9 9-39-49-59-69-79-89-99-109-11RatioWhat It MeasuresShort-term solvency,or liquidity,ratios:Current ratioAbility to use assets to pay off liabilities.Quick ratioAbility to use liquid assets to pay off liabi
2、lities quickly.Cash ratioAbility to pay off liabilities with cash on hand.9-12RatioWhat It MeasuresLong-term solvency,or financial leverage,ratios:Total debt ratioHow much of a companys total assets are financed by debt.Debt-equity ratioCompares how much a company is financed by debt with how much i
3、s it finance by equity.Equity multiplierHow much debt is being used to finance assets.Times interest How well a company has its interest obligations covered.ratioCash coverageA companys ability to generate cash from operations.ratio9-13RatioWhat It MeasuresAsset utilization,or turnover,ratios:Invent
4、ory turnoverHow many times each year a company sells its entire inventory.Days sales in How many days on average inventory is on hand before itinventory is sold.Receivables How frequently each year a company collects on its creditturnover sales.Days sales in How many days on average it takes to coll
5、ect on credit receivables sales(average collection period).Total asset How much of sales is generated for every dollar in assets.turnoverCapital intensityThe dollar investment in assets needed to generate$1 in sales.9-14RatioWhat It MeasuresProfitability ratios:Profit marginHow much profit is genera
6、ted by every dollar of sales.Return on assetsHow effectively assets are being used to generate a(ROA)return.Return on equity How effectively amounts invested in the business by its(ROE)owners are being used to generate a return.Market value ratios:Price-earnings How much investors are willing to pay
7、 per dollar of current ratio earnings.Market-to-book Compares market value of the companys investments to ratio the cost of those investments9-159-169-17RuleDescriptionOrganize your thoughtsEmphasize strategic analysisBegin by becoming familiar with the material.Compare notes about key points of the
8、 case and share insights among team members.Make an outline.Purpose of case analysis is to diagnose problems and find solutions.You may need to unravel the case material as presented and reconfigure it in a way that can be more effectively analyzed.Three major categoriesBackground/Problem Statement1
9、0-20%Strategic Analysis/Options60-75%Recommendations/Action Plan10-20%Emphasis should be on analysis.You may need to reorganize the material so that the tools of strategic analysis can be applied.9-18RuleDescriptionBe logical and consistentDefend your positionShare presentation responsibilitiesRambl
10、ing presentations are hard to follow,may confuse the listener,and fail to evoke a good discussion.Present arguments and explanations in logical sequence.Support with facts and appropriate financial analyses.Be sure solutions address the problems you identified.Anticipate what others might disagree w
11、ith and be prepared to defend your views in class discussion.Be aware of the choices you made and implications of your recommendations.Be clear about your assumptions.Be able to expand on your analysis.Strategic management case analyses are often conducted by teams.Each member should have a clear ro
12、le in the oral presentation,preferably a speaking role.Coordinate the different parts into a logical,smooth-flowing whole.9-199-209-21RuleDescriptionBe thoroughMany ideas about oral presentations also apply to written case analysis.However,a written analysis typically has to be more complete.Write o
13、ut the problem statement and articulate assumptions.Support your arguments and reference case materials and other facts more specifically.Coordinate team effortsWritten cases are often prepared by small groups.Within a group you may disagree about the diagnosis or recommended plan of action.Healthy
14、disagreement may lead to a richer understanding of the case,but,before committing your ideas to writing make sure you coordinate your responses.Dont prepare a written analysis that appears contradictory or looks like a patchwork of disconnected thoughts.9-22RuleDescriptionAvoid restating the obvious
15、Present information graphicallyExercise quality controlThere is no reason to restate the case content.This uses up valuable space and accomplishes little.Stay focused on key points.Only restate information that is most central to your analysis.Tables,graphs,and other exhibits are usually one of the
16、best ways to present supporting factual material.Financial calculations such as break-even analysis,sensitivity analysis,or return on investment are best presented graphically.Even qualitative information such as product lists or rosters of employees can be summarized and viewed quickly by using a t
17、able or graph.Use good grammar,avoid misspelling words,and eliminate typos and other visual distractions.Make your written presentation appear as professional as possible.Dont let a poor appearance of your written case keep the reader from recognizing the importance and quality of your analysis.9-23
