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Chapter 4
All page numbers are references to Corporate Finance: A Focused Approach 2nd edition by Ehrhardt and Brigham (Thomson, 2006).
Need to know - purpose of financial statement analysis, common size analysis versus ratio analysis, trend analysis versus benchmarking/competitive analysis, focus on calculating and interpreting ratios, limitations of ratio analysis.
This chapter has several equations. In the past, on the Final Exam, we have given a formula sheet for equations listed in this chapter.
Do not need to know - Dupont equation and how to use/interpret Dupont equation.
1. Read pages 113-114.
2. Watch the Chapter Introduction and Overview video.
3. Read pages 114-125.
4. If you feel the need, watch the videos on Liquidity and Asset Management Ratios (My Fall 2006 video on this topic has crashed. This is an older video that discusses the topic; you do not have access to the numbers used in the video’s calculations.) and on Leverage, Profitability, and Market Ratios (My Fall 2006 video on this topic has crashed. This is an older video that discusses the topic; you do not have access to the numbers used in the video’s calculations.).
5. Solve the problems in the mini-case, all parts except g.
6. Read the remainder of the chapter.
7. Watch the Limitations of Ratio Analysis video.
8. Solve this list of review questions - Question 4-2, 4-6, Self-test 2, Problems 1 to 10. Note, the course website Powepoint slides has answers to all of the mini-case and the "End of Chapter" page has answers to the Questions and Problems.
9. The Chapter 4 quiz should take about 45 minutes to complete.
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