2013년 11월 24일 일요일

About 'industry averages'|The average salary 7K public relations industry is a lie







About 'industry averages'|The average salary 7K public relations industry is a lie








All               financial               statements               are               essentially               historically               historical               documents.

They               tell               what               has               happened               during               a               particular               period               of               time.

However               most               users               of               financial               statements               are               concerned               about               what               will               happen               in               the               future.

Stockholders               are               concerned               with               future               earnings               and               dividends.

Creditors               are               concerned               with               the               company's               future               ability               to               repay               its               debts.

Managers               are               concerned               with               the               company's               ability               to               finance               future               expansion.

Despite               the               fact               that               financial               statements               are               historical               documents,               they               can               still               provide               valuable               information               bearing               on               all               of               these               concerns.

Financial               statement               analysis               involves               careful               selection               of               data               from               financial               statements               for               the               primary               purpose               of               forecasting               the               financial               health               of               the               company.

This               is               accomplished               by               examining               trends               in               key               financial               data,               comparing               financial               data               across               companies,               and               analyzing               key               financial               ratios.
               Managers               are               also               widely               concerned               with               the               financial               ratios.

First               the               ratios               provide               indicators               of               how               well               the               company               and               its               business               units               are               performing.

Some               of               these               ratios               would               ordinarily               be               used               in               a               balanced               scorecard               approach.

The               specific               ratios               selected               depend               on               the               company's               strategy.

For               example               a               company               that               wants               to               emphasize               responsiveness               to               customers               may               closely               monitor               the               inventory               turnover               ratio.

Since               managers               must               report               to               shareholders               and               may               wish               to               raise               funds               from               external               sources,               managers               must               pay               attention               to               the               financial               ratios               used               by               external               inventories               to               evaluate               the               company's               investment               potential               and               creditworthiness.
               Although               financial               statement               analysis               is               a               highly               useful               tool,               it               has               two               limitations.

These               two               limitations               involve               the               comparability               of               financial               data               between               companies               and               the               need               to               look               beyond               ratios.

Comparison               of               one               company               with               another               can               provide               valuable               clues               about               the               financial               health               of               an               organization.

Unfortunately,               differences               in               accounting               methods               between               companies               sometime               makes               it               difficult               to               compare               the               companies'               financial               data.

For               example               if               one               company               values               its               inventories               by               the               LIFO               method               and               another               firm               by               average               cost               method,               then               direct               comparisons               of               financial               data               such               as               inventory               valuations               are               and               cost               of               goods               sold               between               the               two               firms               may               be               misleading.

Some               times               enough               data               are               presented               in               foot               notes               to               the               financial               statements               to               restate               data               to               a               comparable               basis.

Otherwise,               the               analyst               should               keep               in               mind               the               lack               of               comparability               of               the               data               before               drawing               any               definite               conclusion.

Nevertheless,               even               with               this               limitation               in               mind,               comparisons               of               key               ratios               with               other               companies               and               with               industry               averages               often               suggest               avenues               for               further               investigation.
               An               inexperienced               analyst               may               assume               that               ratios               are               sufficient               in               themselves               as               a               basis               for               judgment               about               the               future.

Nothing               could               be               further               from               the               truth.

Conclusions               based               on               ratio               analysis               must               be               regarded               as               tentative.

Ratios               should               not               be               viewed               as               an               end,               but               rather               they               should               be               viewed               as               a               starting               point,               as               indicators               of               what               to               pursue               in               greater               depth.

They               raise               may               questions,               but               they               rarely               answer               any               question               by               themselves.

In               addition               to               ratios,               other               sources               of               data               should               be               analyzed               in               order               to               make               judgments               about               the               future               of               an               organization.

They               analyst               should               look,               for               example,               at               industry               trends,               technological               changes,               changes               in               consumer               tastes,               changes               in               broad               economic               factors,               and               changes               within               the               firm               itself.

A               recent               change               in               a               key               management               position,               for               example,               might               provide               a               basis               for               optimism               about               the               future,               even               though               the               past               performance               of               the               firm               may               have               been               mediocre.
               Few               figures               appearing               on               financial               statements               have               much               significance               standing               by               themselves.

It               is               the               relationship               of               one               figure               to               another               and               the               amount               and               direction               of               change               over               time               that               are               important               in               financial               statement               analysis.

How               does               the               analyst               key               in               on               significant               relationship?

How               does               the               analyst               dig               out               the               important               trends               and               changes               in               a               company?

Three               analytical               techniques               are               widely               used;               dollar               and               percentage               changes               on               statements,               common-size               statements,               and               financial               ratios               formulas.






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