ANALYSIS FINANCIAL REPORT MUNADIA (46110036)

Financial Statement Analysis

Liquidity analysis

Current Ratio

By Munadia

3B D4/46110036

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

Who are interested in the analysis of financial statements as well as the users of financial statements?

1.      Investor

2.      Employee

3.      Creditor

4.      Customer

5.      Supplier

6.      Government

7.      Community

Analysis of financial statements covering four main financial aspects, namely:

1.      Liquidity analysis

Analysis of liquidity is the ratio that indicates a company's ability to meet its short term obligations

2.      Solvency analysis

3.      Profitability analysis

4.      Analysis of cash flows

5.       Bankruptcy Prediction analysis

6.      Risk  analysis

7.      Investment analysis

The method used in analysis

The current ratio (current ratio) indicates a company's ability to cover its current liabilities with current assets owned.

Formula of current     =        Total Current Assets

                                                Total Current Liabilities

Financial statements:

-          Balance Sheet

-          Statements of Income

-           Statement of Changes in Shareholder’s equity

-          Statement of Cash flow

-          Notes to the consolidated financial statements         

To determine the current ratio can be seen from the financial statements on Balance sheet.

The analysis process/procedure

Current ratio is calculated using the following formula:

Current Ratio =         Total Current Assets

                                Total Current Liabilities               Total Current Assets

                                                                                        

Example: Current Ratio =   89.000         ->   total current asset

                                                61.000         ->            TotalCurrent Liabilities

                                          =      1,46

Interpretation:

Current ratio of Rp 1,46 in 2011 showed that for every Rp  1 of current liabilities provided or secured by current assets amounting to Rp 1,46. This means that there is a safety margin (margin of safety) of Rp 0,46.

Advantages of Calculating Current Ratio Analysis

Current ratio of a company shows that whether a company is able to pay its short term obligations in the current fiscal year. The higher number of the current ratio is an indicator of company’s financial strength and market becomes sure about the stability of the company. The lower the current ratio the greater is the risk of liquidity associated with the company.