financial statement analysis

Financial Statement Analysis Presentation

Annakae Wonder

Natoya Kelly

Shanae Brooks Alex Ellis

Companies in the Spot light Today

Sagicor Life Jamaica LimitedGuardian Holdings Limited

AGENDA Factors to consider in undertaking a comprehensive

analysis Valuation methodologies used in recording key

components of financial statements. Cash Flow statements Identifying audit opinion of companies and the information

they convey. Common size both company financial statements Ratio Analysis of both companies Forecasted balance sheet for both companies.

FACTORS TO BE CONSIDER FOR A COMPREHENSIVE ANALYSIS

• Economic characteristics

• Corporate strategies

• Accounting strategy

• Regulatory Framework

VALUATION METHODS USED IN RECORDING COMPONENTS OF FINANCIAL STATEMENTS

Valuation Methodologies Identified are as Follows:

•Historical Cost

• Fair Value

•Revenue Recognition

Statement of Cash Flow

The three main components noted of both company’s Statement of Cash Flow include

• The Operating activity

• The Investing activity

• The Financing activity

The Relationship of the Components

The Relationship of the components of Sagicor Life Jamaica

Guardian Holdings Statement of Cash Flow

• Guardian Holdings Limited gain most of its cash flow from

financing and operating activities which is used for investing

• Sagicor Life Jamaica limited gained most of its cash flow from

operating which is used for investing and to pay back its capital

providers.

Audit Opinion and Report

What audit opinion was used?The independent auditors of Sagicor Life Jamaica Limited and

Guardian Holdings limited both issued an unqualified audit

opinion which means there are no identified material

weaknesses and there have been no restrictions on the scope

of the auditor’s work.

Sagicor Life Jamaica Limited

Sagicor Life Jamaica Limited

2012 2011 2010

Sagicor Life Jamaica Limited

2012 2011 2010

Sagicor Life Jamaica Limited

Sagicor Life Jamaica Limited

2012 2011 2010

Guardian Holdings Limited

Guardian Holdings Limited

2012 2011 2010

Guardian Holdings Limited

Guardian Holdings Limited

Ratio Analysis

Return on Average Assets

Return on Average Assets - indicates what a company can do with what it possesses

ROAA = Net Income / Total Average Assets

Return on Average Assets

Sagicor Life Jamaica Limited – 4% or 0.04 : 1

Guardian Holdings Limited – 1% or 0.01 : 1

General Accident Insurance Company Limited- 8% or0.08 : 1

Return on Shareholders’ Equity Ratio

Return on Capital Employed - is a measure of the returns that

a business is achieving from the capital employed.

ROCE = Net Income – Preferred Stock dividends/ Average

Common Shareholders’ Equity.

Return on Shareholders’ Equity Ratio

Sagicor Life Jamaica Limited – 76% or 0.76:1

Guardian Holdings Limited – 13% or 0.13:1

General Accident Insurance Company – 19% or 0.19:1

Current Ratio

The current ratio indicates a company's ability to meet short-term debt

obligations. The current ratio measures whether or not a firm has

enough resources to pay its debts over the next 12 months. Potential

creditors use this ratio in determining whether or not to make short-

term loans.

• Current ratio = Current assets/ Current liabilities

Current Ratio

Sagicor Life Jamaica Limited – 126% or 1.26 : 1

Guardian Holdings Limited – 286% or 2.86 : 1

General Accident Insurance Company – 432% or 4.32 : 1

Liabilities to Shareholders’ Equity

It measures a company's ability to repay its obligations. If the ratio is

increasing, the company is being financed by creditors rather than from its

own financial sources which may be a dangerous trend. Lenders and investors

usually prefer low debt-to-equity ratios because their interests are better

protected in the event of a business decline. Thus, companies with high debt-

to-equity ratios may not be able to attract additional lending capital.

Liabilities to Shareholders’ Equity

Sagicor Life Jamaica Guardian Holdings Ltd General Accident0%

10%20%30%40%50%60%70%80%90%

100%

409%602%

203%

100% 100% 100%

Liabilities Equity

Liabilities to Assets Ratio

used to measure a company's financial risk by determining

how much of the company's assets have been financed by

debt. 

Liabilities to Assets Ratio = Total Liabilities/ Total Assets

Liabilities to Assets Ratio

Sagicor Life Jamaica Limited – 80% or 0.8 : 1

Guardian Holdings Limited – 86% or 0.86: 1

General Accident Insurance Company – 67% or 0.67: 1

Forecasted Balance Sheet

Technique – Trend Analysis

Factors consideredInflation RateChanges in TaxationInterest Rate

Sagicor Life Jamaica Limited

Sagicor Life Jamaica Limited

Sagicor Life Jamaica Limited

Guardian Holdings Limited

Guardian Holdings Limited