2.1 Financial Ratio Analysis

Owing to the different sizes，we could not directly compare between two companies when we get their financial statements.To avoid the problems involved in comparing companies of different size，one of the most important measures is to calculate and compare financial ratios.Financial ratios are traditionally grouped into the following categories：①Short-term solvency or liquidity measures；②Long-term solvency ratios；③ Asset management or turnover measures；④ Profitability measures；⑤Market measures.

2.1.1 Short-Term Solvency Measures

Short-term solvency ratios measure the firm's ability to pay its bills over the short run without due stress.The group of ratios focuses on one firm's current assets and current liabilities，sometimes called liquidity measures.

1.Current Ratio（流动比率）

The current ratio is the ratio of the current assets to current liabilities.It measures the ability of one firm to translate its current assets into cash to pay its current liabilities off.Normally，a current ratio is expected to be 1 ~ 2.A lower-than-1 current ratio means bad short-term liquidity because that net working capital（current asset less current liabilities） is negative，while a higher-than-2 one means good short-term liquidity，but it depends on the specific industries.

2.Quick（or Acid-Test） Ratio（速动比率）

Compared with the current ratio，the number of inventories isn.t taken into consideration in the quick ratio.Because inventory is the least liquid current asset，so the book value couldn.t accurately reflect the market value.Moreover，a large bulk of inventories，however，encumber the liquidity of firms in many circumstances.Similarly，the quick ratio is expected to be 1，but it also varies a great deal across industries.However，an extremely high quick ratio is not a good signal，it means too much cash is occupied by other current assets，which encumber the cash turnover.

Notice that using cash to buy inventory does not affect the current ratio，but it reduces the quick ratio，again，owning to the weakest liquidity of inventory.

3.Cash Ratio（现金比率）

The cash ratio is the ratio of cash to current liabilities.Normally，it is expected to be more than 20%.Because cash is the most liquid current asset，the very short-term creditor might care about the cash ratio.

2.1.2 Long-Term Solvency Measures（长期偿债能力比率）

Long-term solvency ratios reflect the firm's ability to meet its obligations in the long run，or its financial leverage，so they are sometimes called financial leverage ratios or leverage ratios.

1.Total Debt Ratio（总负债比率）

The total debt ratio considers one firm's ability to pay off both current liabilities and non-current liabilities，which could be defined as：

Normally，the lower the total debt ratio is，the easier the firm is to meet the obligation in the long term.And the ratio is expected to be 60% for most firms.Moreover，two variations of it are frequently used.

2.Times Interest Earned（利息倍数）

Times Interest Earned measures how well one firm has its interest obligations covered，it's also called the interest coverage ratio.

Normally，the higher the times interest earned is，the stronger ability the firm has to meet the obligations in the long run.The ratio is expected to be 3，and for keeping debt-paying ability，it must be no less than 1.

3.Cash Coverage（现金保障倍数）

The cash coverage ratio measures how well a company has its interest obligations covered.Notice that depreciation and amortization are two accounting concepts but not actual cash flow，but they are deducted from the expense.Actual cash available to pay interest should include the amount of depreciation and amortization，so the cash coverage ratio is defined as：

EBITDA（息税折旧摊销前利润） is not only a basic measure of a firm's ability to generate cash from operations but is also used as a measure of cash flow available to meet financial obligations.

4.Other Useful Long-Term Solvency Ratio

Moreover，we could also include notes payable（ normally bank debt） and long-term debt in the numerator and EBITDA in the dominator as a long-term solvency ratio：

Interest bearing debt/EBITDA

Values below 1 on this ratio are considered very strong and values above 5 are considered weak.

2.1.3 Asset Management or Turnover Measures（资产管理和周转指标）

1.Inventory Turnover（存货周转率）

Inventory turnover measures how many times the firms sell off their entire inventory in one year.As long as they don.t run out of stock and thereby forgo sales，the higher the ratio is，the more efficient the inventory management is.

After we know how many times we turn our inventory over during one year，we can figure out how long it took us to turn it over on average：

Day's sales in inventory roughly show how many days inventory sits on before it is sold.

2.Receivables Turnover（应收账款周转率）

Similarly，receivables turnover measures the average times the firms collect their credit accounts and lent the money again in one year，reflecting how fast they could collect the sales account.

And the days'sales in receivable are defined below：

Day's sales in receivables roughly show how many days a firm needs to collect on its credit sales.This ratio is also called the average collection period（ACP）.

3.Total Asset Turnover（总资产周转率）

The total asset turnover ratio measures the number of times a company's total assets are turned over in a year.Generally speaking，it reflects how much one unit of asset contribute to the firm.Besides asset management，it's also an important ratio to describe the profitability of one firm.Normally，the total asset turnover is expected to be 80%.Commonly，the ratio is less than 1，especially if a firm has a large number of fixed assets.

2.1.4 Profitability Measures（盈利性指标）

Profitability measures reflect how efficiently the firm uses its assets and how efficiently the firm manages its operations.

1.Profit Margin（销售利润率）

The profit margin is the ratio of net income to sales.It measures how much net income each unit of sales can generate.

2.EBITDA Margin（EBITDA利润率）

The EBITDA margin is another commonly used measure of profitability.Because EBITDA adds noncash expenses back，EBITDA margin directly focuses on operating cash flows rather than net income，regardless of capital structure or taxes.

Normally，we expect a higher EBITDA margin，which corresponds to a low expense ratio relative to sales.However，it also varies a great deal across industries.Grocery stores have a notoriously low-profit margin of around 2%，but that for the pharmaceutical industry is about 15%.

3.Return on Assets（资产收益率）

Return on assets（ROA） is a measure of profit per unit of asset contribute to the firm.ROA is usually measured as：

4.Return on Equity（权益收益率）

Return on assets（ROE） is a measure of how profit per unit of equity contribute to the firm.Because one firm's final goal is maximizing the benefits of stockholders，ROE is the most important measure of performance for investors.ROE is usually measured as：

5.The DuPont Identity（杜邦分析法）

Notice that we can separate ROE into two other ratios，ROA and the equity multiplier：

Then，we can further decompose ROE by multiplying the top and bottom by total sales：

ROE=Profit margin×Total asset turnover ×Equity multiplier

The last expression of the preceding equation is called the DuPont identity.it's obvious that the ROE is affected by three factors：① Operating efficiency（measured by profit margin）；②Asset-using efficiency（measured by total asset turnover）；③Financial leverage（measured by the equity multiplier）.

【Example 2-1】

Pop Co.has a debt-equity ratio of 0.7.Return on assets is 8.4 percent，and the total equity is ＄840.000.What is the equity multiplier？ Return on equity？Net income？

Answer：

So，Net income=ROE×Total Equity=0.1428×840.000=＄119.952

2.1.5 Market Value Measures（市场指标）

The group of ratios is not based on the financial statement，but the market information.

1.Earnings Per Sharing Ratio（每股收益）

EPS is the ratio of net income to shares outstanding.

2.Price-Earnings Ratio（市盈率）

Price-earnings ratio，or PE ratio，is defined as the ratio of price per share to EPS.PE ratio measures how much the investors are willing to pay per share of one firm.The higher PE ratio commonly implies that the investors expect the firm a promising future.

3.Market-to-Book Ratio（市值面值比）

Market-to-book ratio is the ratio of market value per share to book value per share.

Book value per share is an accounting number that reflects historical costs.The market-to-book ratio compares the market value of the firm's investments to its cost，so a value less than 1 could mean that the firm fails to create value for the investors.

4.Market Capitalization（股票市值）

Market capitalization is a commonly used ratio for potential investors to one firm，equal to the firm's stock market price per share multiplied by the number of shares outstanding.

Market capitalization=Price per share×Share outstanding

5.Enterprise Value（企业价值）

Enterprise Value measures the market value of outstanding shares of stock of one firm plus the market value of outstanding interest-bearing debt less cash on hand.The ratio could closely estimate how much one investor should spend on buying all outstanding stock of the firm and also paying off the debt.The cash deducted is immediately used to pay the debt or dividend off.

EV=Market capitalization+Market value of interest bearing debt-Cash

6.Enterprise Value Multiples（企业价值乘数）

Enterprise Value Multiplies are used to estimate the value of the firm's total business.Notice that even when there are differences in capital structure or interest expense between two companies，we could still use the ratio to compare them.

Similar to PE ratios，a firm with high growth opportunities means the investors expect it with a promising future.

案例分析2-1 《康美药业财务造假》

一、案例背景

康美药业是曾经的千亿市值白马股，但自2018年以来屡遭市场质疑，证监会经过5个月的调查，证实了康美药业财务造假。2019年4月29日晚间，康美药业公告表示，公司从2018年12月28日被证监会立案调查后，对此进行了自查，发现2018年之前的营业收入、营业成本、费用及款项收付方面存在账实不符的情况。其中，康美药业对2017年财务报表进行重述，货币资金多计299.44亿元，营业收入多计88.98亿元，销售费用少计4.97亿元，财务费用少计2.28亿元等。

二、康美药业财务造假迹象

（1）存贷双高。康美药业在有巨额存款的情况下还存在巨额负债，背负负债的同时还承担着高额的财务费用，这本身就不合理，而其闲置存款不购买理财产品也不进行资金管理，利息收入非常低，这一行为违背一般管理者的商业逻辑。由此可以看出其存款可能存在虚构情况。

（2）净经营现金流每年都低于净利润。这可能存在两种情况：一是企业近年来的实际收入和利润都是虚高的；二是应收账款存在坏账。两种情况均证明康美药业存在虚增利润的现象。

（3）应收账款和存货均高于同行业。存货余额共180亿元，金额较大，其中还有人参等难以判断存在性的存货。证明其虚构的利润可能放入了存货中。与此同时，消耗性生物资产在市场价格下降的时候不计提跌价准备，在关联方资金往来中其他应收款余额中坏账准备为0元。

（4）康美药业主业为医药贸易，毛利率达到30%，远高于行业平均水平。横向对比说明了康美药业的净利润有虚高之嫌。

（5）账面现金数377亿元，基本与有息负债数400亿元相同。有息负债融资的资金基本没有用于生产经营，因此，融资现金就无法转化成其他科目，极大可能是被大股东体外占用了，体外占用无法在报表中体现。因此，报表中一直显示有377亿元现金，但是依然需要不断增加有息负债。

（6）2017年利息收入2.69亿元，年利息率大约0.7%。利息收入过低也可以作为资金被体外占用的证据。

（7）股东股权质押比例非常高。截至目前，大股东康美实业持有的康美药业91.91%的股权已经质押，表明有庄股的嫌疑。

资料来源：王秀珍.康美药业财务造假案例分析［J］.经济师，2020（2）：98，100.