Learn income statement management skills with Corporate Finance | Bojan Radojicic posted on the topic | LinkedIn (2024)

What You Can Do with Income Statements

🔍💼🔢 10 Key EBITDA Ratios for Comprehensive Financial Analysis 🔢💼🔍When evaluating a company's financial performance, EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) ratios provide valuable insights into profitability, operational efficiency, and cash flow generation. Here are ten essential EBITDA ratios to consider:1️⃣ 📈 EBITDA Margin: Measure the company's profitability by expressing EBITDA as a percentage of total revenue. It indicates the efficiency of converting revenue into operating profits.2️⃣ 💰 EBITDA-to-Sales: Assess the company's ability to convert sales into EBITDA. Divide EBITDA by total sales to understand operational efficiency and cost management.3️⃣ ⚙️ EBITDA-to-Asset: Determine how effectively the company utilizes its assets to generate EBITDA. Divide EBITDA by total assets to assess asset productivity.4️⃣ 💵 EBITDA-to-Operating Income: Compare EBITDA to operating income to evaluate the impact of non-operating items such as interest and taxes on profitability.5️⃣ 🌐 EBITDA Coverage Ratio: Evaluate the company's ability to cover interest expenses using EBITDA. Divide EBITDA by interest expenses to understand debt-servicing capacity.6️⃣ 🚀 EBITDA Growth Rate: Measure the annual growth rate of EBITDA over a specific period. Compare it to revenue growth to assess margin expansion or contraction.7️⃣ 🏦 EBITDA-to-Interest Expense: Determine the company's ability to cover interest expenses with EBITDA. Divide EBITDA by interest expenses to gauge financial health.8️⃣ 🌍 EBITDA-to-Capital Expenditure: Evaluate the company's ability to generate sufficient cash flow for capital expenditures. Divide EBITDA by capital expenditure to assess self-sustainability.9️⃣ 📊 EBITDA-to-Equity: Measure the return on equity using EBITDA. Divide EBITDA by shareholders' equity to understand profitability relative to the equity invested.🔟 ⏳ EBITDA-to-Working Capital: Assess the company's liquidity and short-term financial health. Divide EBITDA by working capital to evaluate the ability to cover short-term obligations.These EBITDA ratios provide a comprehensive view of a company's financial performance and help inform strategic decision-making. It's crucial to analyze these ratios alongside other financial metrics and industry benchmarks for a holistic understanding.#Finance #EBITDA #FinancialAnalysis #PerformanceMetrics

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🔍💼🔢 10 Key EBITDA Ratios for Comprehensive Financial Analysis 🔢💼🔍When evaluating a company's financial performance, EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) ratios provide valuable insights into profitability, operational efficiency, and cash flow generation. Here are ten essential EBITDA ratios to consider:1️⃣ 📈 EBITDA Margin: Measure the company's profitability by expressing EBITDA as a percentage of total revenue. It indicates the efficiency of converting revenue into operating profits.2️⃣ 💰 EBITDA-to-Sales: Assess the company's ability to convert sales into EBITDA. Divide EBITDA by total sales to understand operational efficiency and cost management.3️⃣ ⚙️ EBITDA-to-Asset: Determine how effectively the company utilizes its assets to generate EBITDA. Divide EBITDA by total assets to assess asset productivity.4️⃣ 💵 EBITDA-to-Operating Income: Compare EBITDA to operating income to evaluate the impact of non-operating items such as interest and taxes on profitability.5️⃣ 🌐 EBITDA Coverage Ratio: Evaluate the company's ability to cover interest expenses using EBITDA. Divide EBITDA by interest expenses to understand debt-servicing capacity.6️⃣ 🚀 EBITDA Growth Rate: Measure the annual growth rate of EBITDA over a specific period. Compare it to revenue growth to assess margin expansion or contraction.7️⃣ 🏦 EBITDA-to-Interest Expense: Determine the company's ability to cover interest expenses with EBITDA. Divide EBITDA by interest expenses to gauge financial health.8️⃣ 🌍 EBITDA-to-Capital Expenditure: Evaluate the company's ability to generate sufficient cash flow for capital expenditures. Divide EBITDA by capital expenditure to assess self-sustainability.9️⃣ 📊 EBITDA-to-Equity: Measure the return on equity using EBITDA. Divide EBITDA by shareholders' equity to understand profitability relative to the equity invested.🔟 ⏳ EBITDA-to-Working Capital: Assess the company's liquidity and short-term financial health. Divide EBITDA by working capital to evaluate the ability to cover short-term obligations.These EBITDA ratios provide a comprehensive view of a company's financial performance and help inform strategic decision-making. It's crucial to analyze these ratios alongside other financial metrics and industry benchmarks for a holistic understanding.#Finance #EBITDA #FinancialAnalysis #PerformanceMetrics

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How to analyze companiesA huge part of that, is analyzing the 3 financial statements.Here’s how to analyze and interpret the…- Balance Sheet- Income Statement- Cash Flow StatementBalance Sheet:The balance sheet consists of the following elements:- Current assets- Long-term assets- Current liabilities- Long-term liabilities- Shareholders equityThe balance sheet is based on a simple formula:Assets = Liabilities + EquitiesA balance sheet shows you what a company owns and owes.Income Statement:An Income Statement shows you the revenues and expenses of a company.It consists of the following elements:Revenue - COGS= Gross Profit- Operating Expenses= Operating Income- Non-Operating Income / Expenses= Pre-Tax Income- Income Tax= Net IncomeCash Flow Statement:A Cash Flow Statements shows you the cash that enters and leaves a company.The Cash Flow Statements consists of 3 elements:- Cash Flow from Operating Activities- Cash Flow from Investing Activities- Cash Flow from Financing ActivitiesCash Flow from Operating Activities:Net Income+ Non-Cash Changes+/- Changes in Working Capital= Cash Flow from Operating ActivitiesCash Flow from Investing Activities:- Capital Expenditures- Acquisitions+ Proceeds from the Sale of Investments= Cash Flow from Investing ActivitiesCash Flow from Financing Activities:+/- Borrowing/Repaying Debt+/- Issuing/Repurchasing Stocks- Dividends Paid= Cash Flow from Financing Activities__📚 Sign up here if you want to receive my free Financial Analysis course and plenty of other free investment resources: https://t.co/cwPWWDTvzO

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If you are building a financial model, there are some key finance and accounting skills you need to have, so you can project how a decision will impact the balance sheets and income statement.Common Valuation/Decision Techniques➡️ Net Present Value➡️ Internal Rate of Return➡️ Return on Investment➡️ Break-Even AnalysisCommon Accounting Practices➡️ Modeling Cash Flows➡️ Accrual-Based FlowsDiscover more skills needed to create a financial model: https://bit.ly/41i5EBY#FinanceLooksLike #finance #financialmodeling

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Simple way to Financial statements Analysis

A brief recap of buffetology 😎

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How to analyze companiesA huge part of that, is analyzing the 3 financial statements.Here’s how to analyze and interpret the…- Balance Sheet- Income Statement- Cash Flow StatementBalance Sheet:The balance sheet consists of the following elements:- Current assets- Long-term assets- Current liabilities- Long-term liabilities- Shareholders equityThe balance sheet is based on a simple formula:Assets = Liabilities + EquitiesA balance sheet shows you what a company owns and owes.Income Statement:An Income Statement shows you the revenues and expenses of a company.It consists of the following elements:Revenue - COGS= Gross Profit- Operating Expenses= Operating Income- Non-Operating Income / Expenses= Pre-Tax Income- Income Tax= Net IncomeCash Flow Statement:A Cash Flow Statements shows you the cash that enters and leaves a company.The Cash Flow Statements consists of 3 elements:- Cash Flow from Operating Activities- Cash Flow from Investing Activities- Cash Flow from Financing ActivitiesCash Flow from Operating Activities:Net Income+ Non-Cash Changes+/- Changes in Working Capital= Cash Flow from Operating ActivitiesCash Flow from Investing Activities:- Capital Expenditures- Acquisitions+ Proceeds from the Sale of Investments= Cash Flow from Investing ActivitiesCash Flow from Financing Activities:+/- Borrowing/Repaying Debt+/- Issuing/Repurchasing Stocks- Dividends Paid= Cash Flow from Financing Activities__📚 Sign up here if you want to receive my free Financial Analysis course and plenty of other free investment resources: https://t.co/cwPWWDTvzO

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Let's dive into the fundamentals:▶️ 𝗜𝗻𝗰𝗼𝗺𝗲 𝗦𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁 Explanation:Summarizes a company's revenues, expenses, and profits (or losses) over a specific period, aiding in assessing financial performance.▶️ 𝗦𝗶𝗴𝗻𝗶𝗳𝗶𝗰𝗮𝗻𝗰𝗲 𝗼𝗳 𝗮𝗻 𝗜𝗻𝗰𝗼𝗺𝗲 𝗦𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁:Profit MeasurementInvestor InsightsDecision-Making Support▶️ 𝗖𝗼𝗺𝗽𝗼𝗻𝗲𝗻𝘁𝘀 𝗼𝗳 𝗮𝗻 𝗜𝗻𝗰𝗼𝗺𝗲 𝗦𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁:Revenue, COGS, Gross Profit, Operating Expenses, Operating Income, Interest & Taxes, Net Income▶️ 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 𝗦𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁 Overview:Analyzes changes in balance sheet accounts impacting cash & equivalents across operational, investing, and financing activities.▶️ 𝗦𝗶𝗴𝗻𝗶𝗳𝗶𝗰𝗮𝗻𝗰𝗲 𝗼𝗳 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 𝗦𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁:Liquidity AnalysisRevenue Generation AssessmentBudgeting & Planning Aid▶️ 𝗖𝗼𝗺𝗽𝗼𝗻𝗲𝗻𝘁𝘀 𝗼𝗳 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 𝗦𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁:Operating Activities, Investing Activities, Financing Activities, Net Cash Flow, Beginning & Ending Cash BalanceCurious about the detailed differences between an Income Statement and a Cash Flow Statement?Get your hands on a FREE comprehensive guide below!For more information, contact my profile https://lnkd.in/dg_EuDpJ email abidhussain713@gmail.com or www.abidfinancials.com

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