Asset base composition
Common size balance sheets are used to examine the change in asset base composition over time.
Capital structure analysis
Segment analysis and capital allocation
Accruals and earnings quality
Balance sheet accruals ratio for time t = (NOAt – NOAt -1) / [(NOAt + NOAt-1)/2]
Cash flow accruals ratio for time t = [NIt – (CFOt + CFIt)] / [(NOAt + NOAt-1)/2]
Cash flow relationships
Decomposition and analysis of the company’s valuation
When a company has significant investments in associates, the price-to-earnings multiple of the “pure company” should be calculated by removing the impact of associates and using adjusted market value and net income.