Break-Even Analysis And Investment Appraisal

Understanding the Break-Even Point

The company ABC, L.C. manufactures some products with an average sales price of € 25/unit, with fixed annual costs of € 110,000. The average unit variable costs are € 5.

a) At what volume of production will the threshold of profitability be reached?

b) Assuming that annual sales are estimated at 20,000 units, being the distribution evenly over a year, on what date will the break-even point be reached?

c) What would be the sales value or turnover corresponding to the threshold of profitability?

The above problem relates to break-even analysis and the calculation of the break-even point. The break-even analysis tool is a financial calculation tool which helps businesses to determine the point of break-even (Jiambalvo, 2019). Hence, it becomes important to understand the meaning of the break-even point. The point of break-even is best explained as the stage in which the business or its products and services that it has to offer to its customers become profitable. The break-even point is also referred to as appoint where a business enters the situation of a non profit no loss stage (Brewer, Garrison & Noreen, 2015). It is at this stage where the organisation is neither generating any profit nor is losing out any of its money or funds (Ponisciakova, Gogolova & Ivankova, 2015). However, at this point, the business has covered its total expenses which comprises of both, variable costs as well as fixed costs. Variable expenses are those expenses which are proportionately triggered by changes in the activity or production level of the business (Mowen, Hansen & Heitger, 2015). Fixed expenses on the contrary does not depend upon the production level and remains fixed for a certain period of time. The breakeven point in a nutshell is the activity level (expressed in dollar value of sales or units that are sold) which covers the total expenses and any sale beyond the point will contribute to operating profits of the business (Weygandt et al., 2018). The analysis of breakeven is an important consideration in cvp (cost, volume and profit) analysis. The cvp analysis tool in marginal costing helps a business to interpret how any change in the cost structure and the activity level is most likely to have an impact upon the profitability of the business (Davis & Davis, 2019).

According to the problem, the given set of numerical data presented is as follows:

Total Fixed Cost = 110,000

Average Selling Price Per Unit = 25

Average Variable Cost Per Unit = 5

Therefor, the total contribution margin per unit = Selling Price Per Unit – Variable Cost Per Unit = 25 – 5 = 20 per unit

The formula for calculating the point of break even to be expressed in units = Total Fixed Cost / Contribution Margin Per Unit = 110,000 / 20 = 5,500 units

Hence, the volume of production in which the company can attain the threshold of profitability = 5,500 units

According to the problem, the following data has been provided to solve for this requirement.

Calculation of Break-Even Point

Estimated Annual Sales = 20,000 units

Sales Distribution = Evenly Over the Year

Average Unit Sales on Daily Basis = 20,000 units / 365 Days = 54.79 units

Total Units to Break Even (Calculated Above) = 5,500 units

Time to attain break even units = 5,500 units / 54.79 units = 100.38 days (rounded off to 100 days)

Therefore, it will take the business an average of 100 days to reach the point of break-even.

If the same is quantified to a date assuming the beginning date to be on January 01, the business will attain this position on the 10^th of April (9^th of April if a leap year is assumed to be).

As per the problem, the unit sales price of the business = € 25 per unit on an average.

The total units which the company have to sell in order to break even is calculated above at 5,500 units.

Therefore, the sales value which is corresponding to the profitability threshold = Breakeven units * Average selling price per unit = 5,500 units * € 25 per unit = € 137,500.

The company Derabel, S.A. is considering buying a new machine for its production process. This project means an initial cost of € 200,000 and the machine is estimated to have a useful life of 5 years. The maximum productive capacity of the machine is 200,000 units per year. However, the first year it is expected that the activity will be 70% of the maximum installed capacity, reaching 100% from the second year.

During the first year, the unit sales price will be € 2.50, the unit variable cost € 1.50 and the fixed annual cost € 60,000, resulting in cumulative yearly increases of 4% in the price of the product sale, 3% on variable costs and 2% on fixed costs.

Also, it is assumed that:

• The company uses a linear depreciation system, and the residual value of the machine is € 25,000. Besides, the sale value of the machine at the end of its physical life will be € 30,000 that will be charged in cash.
• The nominal discount rate (kN) used by the company is 8% per year and constant for the planned period.
• The tax rate that taxes the benefits is 25%. Taxes are paid in the period following their accrual.
• All production is sold in the reference period.
• All income and expenses are charged and paid in cash.

With the above data, determine the Net Cash Flows after taxes of the project described above. Calculate the net absolute return.

This problem and case study pertains to investment appraisal which is also referred to as capital budgeting. The primary objective of any public limited company is not to maximise profits but to maximise the wealth of shareholders (Yhip & Alagheband, 2020). Shareholder’s wealth maximisation helps the organisation in delivering them long term value. Indulging in long term investments is one way by which an organisation can help deliver value to the shareholders if such investments are able to generate profitable returns. However, it is worth mentioning that in order to undertake any investment decision, the finance manager has to be conservative (Griffin & Mahajan, 2019). This is because investment decisions for the most part requires a business to incur significant capital investments, the nature of which is irreversible. As a result, it is required that the finance manager out of prudence plans properly with respect to undertaking such capital investments (Williams & Dobelman, 2017). Therefore, the manager will prepare a budget also referred to as capital budgets for appropriate planning. Since these decisions require the preparation of budgets, these decisions are also called as capital budgeting which simply means the application of the traditional principles of budgeting in investment decisions for delivering long term value to the shareholders (Robinson, 2020).

Importance of Break-Even Analysis in CVP Analysis

A capital budget will require the manager to forecast all the different sources of cash inflows and cash outflows which are recorded for the useful life of the investment after which the net cash flow is calculated. However, investment decisions are not just undertaken if the value of total cash inflows exceed the value of total cash outflows. The finance manager is required to make use of certain capital budgeting tools to gauge the financial viability of the investment. One of the key financial principles which holds true in the case of such investment decisions are what is called as the time value principle. This means that the present worth of money is more than the worth of same funds in future because of the incremental returns that can be generated at a rate which is called the cost of capital or preferably the weighted average cost of capital. Capital budgeting analysis will require the finance manager to discount the net cash flows calculated to their present values with the help of the weighted average cost of capital which in turn provides a much more realistic picture of the cost benefit analysis. The NPV (net present value) is the most common capital budgeting method which helps gauge the financial viability of the investment and represents the absolute returns that any investment can generate (Easton et al., 2018). These are the two metrics which this case study requires to solve for.

Particulars	0	1	2	3	4	5	6
Investment	2,00,000
Maximum Capacity (Units)		2,00,000	2,00,000	2,00,000	2,00,000	2,00,000
Actual Output Expected		70%	100%	100%	100%	100%
Total Output (Units)		1,40,000	2,00,000	2,00,000	2,00,000	2,00,000
Unit Sale Price (4% increase)		2.50	2.60	2.70	2.81	2.92
Annual Sales (€)		3,50,000	5,20,000	5,40,800	5,62,432	5,84,929
Variable Cost/Unit (3% increase)		1.50	1.55	1.59	1.64	1.69
Annual Variable Cost (€)		2,10,000	3,09,000	3,18,270	3,27,818	3,37,653
Annual Contribution (Sales-VC)		1,40,000	2,11,000	2,22,530	2,34,614	2,47,277
Annual Fixed Costs (2% Increase)		60,000	61,200	62,424	63,672	64,946
Depreciation Expense		35,000	35,000	35,000	35,000	35,000
Taxable Income		45,000	1,14,800	1,25,106	1,35,941	1,47,331
Taxes (25%)			11,250	28,700	31,277	33,985	36,833
After Tax Income		45,000	1,03,550	96,406	1,04,665	1,13,345	-36,833
Add: Depreciation Expense		35,000	35,000	35,000	35,000	35,000
Add: Sale Value of Machine						30,000
Less: Tax on Gain on Sale						1,250
Net Cash Flows	-2,00,000	80,000	1,38,550	1,31,406	1,39,665	1,77,095	-36,833
Discount Factor (8%)	1.00	0.93	0.86	0.79	0.74	0.68	0.63
Present Value of Net Cash Flow	-2,00,000	74,074	1,18,784	1,04,314	1,02,658	1,20,528	-23,211
NPV (Net Present Value)	2,97,148

1. Total output is calculated by multiplying the maximum capacity with the estimated activity level.
2. The sale price per unit for the first year is expected to increase by 4% each year. Furthermore, the variable cost per unit is estimated to increase by 3% each year and the total fixed cost will increase by 2% each year.
3. Total contribution is the difference in between total sales and total variable cost which are calculated by multiplying the per unit cost for each year by the total output produced.
4. Depreciation is calculated as the difference in between the investment cost (€ 200,000) and the residual value (€ 25,000) over the useful life of the investment (5 years).
5. Pre tax income/Taxable Income is the difference in between contribution, fixed expense and depreciation expense. Taxes are levied at 25% on this figure which is paid in the subsequent year. As a result, there will be a cash outflow in Year 6 where the tax liability of Year 5 will have to be paid. This needs to be considered in calculating the absolute returns from the investment for ensuring accuracy.
6. The depreciation expense is added back as this is a non-cash expense which is added back alongside the sale value of the asset (€ 30,000)
7. Another outflow in the terminal year is the tax which the business has to pay on profit on sale of machine. Profit on Sale of Machine = Sale Value – Written Down Value = (€ 30,000 – € 25,000) = € 5,000. Therefore tax = € 5,000 * 25% = € 1,250.
8. Net cash flows are then discounted to their present values assuming the 8% cost of capital which has been provided in the case study.

The final npv figure is calculated as € 297,148. This is the net absolute returns which the investment is expected to generate for the business. This is the absolute profitability of an investment and since the figure is positive, the investment can be recommended for investment decision making. To conclude, Derabel, S.A. should accept this investment as it is a profitable project which will result in long term value creation and wealth maximisation of the shareholders.

The person in charge of the finances of the company MGT, S.A. wants to know the company's situation concerning the industrial sector to which it belongs. For this, it has the following information regarding the industry:

a. General liquidity ratio is 1.55; the acid test is 1.20, and the ratio between the available and the current liabilities is 0.95.

b. The debt ratio stands at 1.25. The margin on sales is 21%. The investment rotation is 1.45 times.

c. Economic profitability is around 23%, and financial profitability is 29%

The data referred to the company (in thousands of €) are the following: 

Assets		Liability and Net Equity
Non-current asset (net)	170	Equity	125
Stocks of finished products	45	Reservations	25
Clients	65	External Resources	105
Banks	70	Loans	65
		Supplier	30
Total Assets	350	Total Net Equity	350

In addition, it is known that:

• Sales are € 250,000 and its direct cost of € 105,000.
• Amortization of € 70,000.
• Long-term debt generates interest at 5%, short-term bank loans at 7%, and the departure of suppliers does not accrue any interest.
• The Corporation Tax is 25%. 

Calculate the liquidity, acid test and debt ratios, and compare them with the sector data. It also calculates the economic and financial returns, and the margin on sales and investment rotation, even making a comparison between the company and sector.

This problem pertains to the calculation of financial ratios and benchmarking. The annual financial statements of any organisation are the primary source of financial information for all the users of accounting information. However, these statements do not tend to communicate all matters which can help stakeholders with decision making (Block, Hirt & Danielsen, 2018). For instance, the users of information cannot look upon mere values reported in the financial statements and make decisions. A proper analysis of such information is required to understand strengths and weaknesses (Brigham & Daves, 2018). As a result, one has to rely upon certain financial statement analysis tools. The use of financial ratios is quite common while analysing the financial statements. These are quantitative results which are calculated with the help of standard mathematical formulas involving financial information which is extracted from the financial statements. Financial ratios allow stakeholders to comprehend an organisation’s position of liquidity, profitability, efficiency and solvency (Madura, 2020). These results can be compared against prior year results for determining the trends in financial performance (Martin, Keown & Titman, 2020).

Investment Appraisal and Capital Budgeting

Financial ratios also tend to allow for industry benchmarking. This is quite common where the financial ratio results are compared against industry average ratios to determine how well an organisation is performing relative to other peers performing in the industry. This analysis allows for organisations to undertake strategic initiatives that can help in gaining competitive advantage and maximizing its market share. 

Income Statement Extracts
Particulars	€'000
Sales	250
Less: Direct Cost (Cost of Sale)	105
Gross Profit	145
Less: Amortization	70
Operating Profit (EBIT)	75
Less: Interest Expense:
Short Term (€65@7%)	4.55
Long Term (€105@5%)	5.25
Profit Before Taxes	65
Less: Tax @25%	16.3
Profit After Taxes	48.9

Assumption: The loan mentioned In the balance sheet at €65 is assumed as short-term bank loan.

General Liquidity Ratio = Current Assets / Current Liabilities = (45+65+70) / (65+30) = 1.89 times

Acid Test Ratio = (Current Assets – Inventories) / Current Liabilities = (180-45) / (65+30) = 1.42 times

Debt Ratio = Total Liabilities / Total Assets = (105+65+30) / 350 = 0.57 times

Economic Returns = EBIT / Total Assets = (75/350) * 100 = 21.43%

Financial Returns = Profit After Taxes / Equity = (48.9/150) * 100 = 32.60%

Margin on Sales = EBIT / Net Sales = (75/250) * 100 = 30%

Investment Rotation = Net Sales / Total Assets = 250 / 350 = 0.71

Ratios	Company	Sector
General Liquidity Ratio	1.89	1.55
Acid Test Ratio	1.42	1.20
Debt Ratio	0.57	1.25
Economic Returns	21.43%	23%
Financial Returns	32.60%	29%
Margin on Sales	30%	21%
Investment Rotation	0.71	1.45

1. The general liquidity ratio can be best interpreted as the current ratio which showcases the sufficiency of total short-term resources for meeting the total short-term debts and obligations of the business. The general liquidity ratio of the company is 1.89 times which means that the company has more than enough current assets to meet all of their current liabilities as the metric is above 1. Furthermore, the performance is even better than that of the sector as the sector result is less at 1.55 times. Hence, the general liquidity ratios of the company is better.
2. The acid test ratio is also referred to as the quick ratio. It is a conservative measure of liquidity performance as the metric only considers the most liquid assets for meeting the short-term obligations. This metric does not consider inventory to be liquid and hence its subtracted from the total current assets in the numerator. The result is above 1 at 1.42 times which means that the company’s overall liquidity position can be considered as favourable. Furthermore, the acid test ratio of the company is even higher than 1.20 times which pertains to the sector result.
3. The debt ratio is a measure of long-term financial stability or the solvency performance of any organisation. This metric can be interpreted as the company’s reliance upon debt sources of finance to finance its total investment in the asset base. The metric is significantly low at 0.57 times which means that the company isn’t highly geared. The exposure to financial leverage is low therefore reducing the exposure to financial risks. Also, the debt ratio of the sector is 1.25 times which means that the company’s gearing is under check.
4. The economic returns ratio is interpreted as the return on investment ratio which can be interpreted as the total profits a company is able to churn out in their course of operations as a result of efficiently utilizing its total investments. Although the metric is high at 21.43%, it lags behind the sector average of 23%.
5. The financial returns ratio is interpreted as the ultimate bottom line returns a company is able to generate as a result of utilizing the shareholder’s equity. It is the total net income which the business can generate for its shareholders. The metric is high at 32.60% and is even better than the sector average of 29%.
6. The margin of sales which is also commonly referred to as the operating profit margin ratio is a measure of the profitability position of the company in the ordinary course of their operations. It indicates the total margin proportionate to sales which is left behind after the revenue is able to cover the direct costs and the indirect costs incurred for a particular financial period. The result for the company is quite profitable at 30% when compared to the sector average of 21%.
7. The investment rotation ratio gauges the efficiency with which a company is able to make use of their total investments to generate revenue. The metric is inferior at 0.71 times considering the comparatively higher sector average at 1.45. This means that the company is generating less revenue relative to their investments when compared to other peers in the industry.

An investment requires an initial disbursement of € 2,500,000 and the duration of the project is 3 years, in the first of which it generates a cash flow of € 1,500,000, in the second 0€ 3,700,000 and the third € 4,100,000.

a. Calculate the Net Present Value of the investment, knowing that inflation is 3% cumulative annually and that the required profitability in the absence of inflation is 8%.

Calculate the actual internal rate of return of the previous investment.

This problem relates to the calculation of NPV and the IRR of an investment. These metrics are one of the most popular capital budgeting methods as these consider the time value of money principle. The npv is a discounted cash flow technique which indicates the absolute returns to be generated and value to be transferred to the shareholder’s wealth over the long term. It is the surplus of discounted values of cash inflows over the discounted values of cash outflows which results in the absolute returns at present worth. One of the main benefits of this technique is that it can account for several factors such as inflation which will be showcased in the numerical solving of this problem. This means that the cost of capital which is used for discounting future cash flows to its present values can be adjusted for inflation to result in accurate forecasting. The decision-making criteria for a singular investment are that the npv has to be positive and above zero for investment sake. Further, the internal rate of return can be interpreted as the relative returns which a project is most likely to generate and is the discount rate at which the npv of the investment will be zero. Hence, if the irr manages to exceed the weighted average cost of capital / the minimum risk adjusted required rate of return, the npv of the investment will be positive and vice versa. Both, npv and irr tend to reflect similar results. However, in the case of mutually exclusive projects, these metrics can reflect upon conflicting results. In such cases, decisions are made on the basis of the npv result because it has better and realistic assumptions concerning the reinvestment rate of cash flows which is absurd in the case of the irr.

Calculating Net Cash Flows After Taxes for an Investment Project

Particulars	0	1	2	3
Initial Investment	-25,00,000
Cash Inflow		15,00,000	37,00,000	41,00,000
Net Cash Flow	-25,00,000	15,00,000	37,00,000	41,00,000
Discount Rate @ 11.24%	1.000	0.899	0.808	0.726
Present Value of Cash Flows	-25,00,000	13,48,436	29,90,059	29,78,523
NPV (Net Present Value)	48,17,018
IRR (Internal Rate of Return)	86.50%

The risk-free rate of return without adjusting for inflation= 8%

The rate of annual inflation is estimated at 3%.

Hence, the risk adjusted discount rate which will be used for discounting = (1+8%) * (1+3%) = 11.24%

A)The calculated NPV of this investment opportunity is equivalent to € 4,817,018

B)The calculated IRR of the opportunity is 86.50% 

Based on the results calculated, the investment can be recommended for the company for investment purpose. This is because the NPV of the investment is positive and favourable which means that the investment will generate absolute returns to enhance the wealth of the shareholders. Furthermore, the calculated IRR also exceeds the assumed risk adjusted discount rate of the investment.

We know the following data of the company Perfilados, S.A: 

a. It bought and consumed € 105,000 in raw materials for the manufacture of its product and, on average, maintained a stock level of them in the stock of € 9,250. Calculate the average storage period.

Calculate the average storage period.

b. The cost of its annual production is € 198,000, and the average value of the products under development is € 11,000. Calculate the average manufacturing period.

c. Taking into account that the company exclusively sold all its annual production and that the average value of its stock in finished goods warehouse was € 18,500, it calculates its average sales period.

d. Assuming that the company sold its products for an amount of € 290,000 and that the customers had on average a debt with the company of € 17,000, it calculates the average collection period.

e. With the data obtained in the previous points, it calculates the average period of economic maturity of Perfilados, S.A.

The total value of raw materials consumed for manufacturing the product is € 105,000.

The average stock level which the company has maintained is worth € 9,250

Therefore, the average storage period = € 9,250 / (€ 105,000 / 365 days) = 9,250 / 287.67 = 32. 16 days

The total cost of annual production by the company is worth € 198,000.

The total average value of products under development is worth € 11,000.

Hence, the average manufacturing period = € 11,000 / (€ 198,000 / 365 days) = € 11,000 / 542.47 = 20.28 days.

The problem assumes that all the annual production has been sold.

The average value of finished goods stock lying in the warehouse is € 18,500.

Therefore, the average sales period in the case = € 18,500 / (€ 198,000 / 365 days) = € 18,500 / 542.47 = 34.10 days

The total value for which the company has sold its products for is worth € 290,000.

The average debt level of customers with the company is worth € 17,000

As a result, the average collection period = € 17,000 / (€ 290,000 / 365 days) = € 17,000 / 794.52 = 21.40 days

Based on the results calculated above, the average period of economic maturity of the company can be calculated.

This is equal to Average Storage Period + Average Manufacturing Period + Average Sales Period + Average Collection Period = 32.16 days +20.28 days +34.10 days + 21.40 days = 107.94 days which can be rounded off to 108 days.

We know the following data of an investment that the company has made:

• An initial disbursement of € 2,000,000 and generates the collections and payments in the successive years of its duration that are shown in the following table:

Years	Collection (€)	Payments (€)
1 Year 2 Year 3 Year 4 Year	4.500.000 5.500.000 6.000.000 4.000.000	3.800.000 4.500.000 5.000.000 3.200.000

Calculate the IRR of the previous project. Justify for what type of discount this investment will be made.

This problem is the final problem of the assignment brief. It pertains the calculation of the IRR based on the provided information of initial investment, the total collections (cash inflows) and total payments (cash outflows). Furthermore, this problem also requires to demonstrate the type of discount rate for which the investment will be acceptable for value provision to the long-term wealth of the shareholders.

There are two prominent ways in which the IRR of the investment can be calculated. Firstly, the spreadsheet has been used with the net cash flows calculated based on the figures that have been presented in the question. After calculating the net cash flows of the investment, the ‘IRR’ function can be used in the spreadsheet to calculate the IRR of the investment. The net cash flows are calculated as the excess of collections over payments for the life of the investment. The calculated IRR is worth 26.08%. The spreadsheet has been presented as follows: 

Figures in  €'000
Year	Collection	Payment	Net Cash Flow
0	-	-	-2,000
1	4,500	3,800	700
2	5,500	4,500	1,000
3	6,000	5,000	1,000
4	4,000	3,200	800
		IRR:	26.08%

There is another approach by which the IRR of this investment opportunity can be calculated.

If the IRR is used as the discount rate, the NPV of the investment will be zero. At a point where the NPV is zero, the present value of all cash inflows will be equal to the present value of the initial investment

Hence by equating this, the present value of initial investment will be 2,000 as the discount factor in Year 0 will be 1.

Therefore,

2,000 = 700 / (1+r)¹ + 1,000 / (1+r)² + 1,000 / (1+r)³ + 800 / (1+r)⁴

On solving for ‘r’, r is calculated as 26.08%

Therefore, the IRR of this investment is 26.08%.

The calculated IRR Is worth 26.08%. This means that if the net cash flows are discounted to their present values at the IRR, the npv of the investment will be 0. Hence, decisions will be based on what the actual weighted average cost of capital is for the company. If the weighted average cost of capital is above the IRR (for instance 27%), the NPV will turn out to be negative. This means that the project will be loss making as the absolute returns will be negative. In such a situation, the company should refrain from investing in the project. However, if the WACC is less than the IRR (for instance 25%), the NPV will be calculated as positive which would mean that the investment is profitable. In such a situation, the investment can be accepted. These examples can further be illustrated with the help of numerical examples presented as follows:

Figures in  €'000
Year	Net Cash Flow	Discount Rate (27%)	Present Value of Cash Flows
0	-2,000	1.000	-2,000.00
1	700	0.787	551.18
2	1,000	0.620	620.00
3	1,000	0.488	488.19
4	800	0.384	307.52
		NPV:	-33.11

It can be observed that the contention is accurate. In a case if the WACC is assumed at 27% and exceeds the calculated IRR of 26.08%, the investment will turn out to have a negative NPV figure. In such a case, the investment should not be accepted for decision making purpose.

Figures in  €'000
Year	Net Cash Flow	Discount Rate (25%)	Present Value of Cash Flows
0	-2,000	1.000	-2,000.00
1	700	0.800	560.00
2	1,000	0.640	640.00
3	1,000	0.512	512.00
4	800	0.410	327.68
		NPV:	39.68

In this scenario, it can be observed that the NPV is positive and above 0 if the WACC in reality is less than the calculated IRR. In such a situation, it is in the best interests for the company to accept the investment opportunity.

To conclude, for the investment to be favourable and acceptable, the discount rate should be less than the calculated IRR of the investment (Warren, Reeve & Duchac, 2016).

References

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Brewer, P. C., Garrison, R. H., & Noreen, E. W. (2015). Introduction to managerial accounting. McGraw-Hill Education.

Brigham, E. F., & Daves, P. R. (2018). Intermediate financial management. Cengage Learning.

Davis, C. E., & Davis, E. (2019). Managerial accounting. John Wiley & Sons.

Easton, P. D., McAnally, M. L., Sommers, G. A., & Zhang, X. J. (2018). Financial statement analysis & valuation. Boston, MA: Cambridge Business Publishers.

Griffin, P. A., & Mahajan, S. (2019). Financial Statement Analysis. Finding Alphas: A Quantitative Approach to Building Trading Strategies, 141-148.

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Ponisciakova, O., Gogolova, M., & Ivankova, K. (2015). Calculations in managerial accounting. Procedia Economics and Finance, 26, 431-437.

Robinson, T. R. (2020). International financial statement analysis. John Wiley & Sons.

Warren, C. S., Reeve, J. M., & Duchac, J. (2016). Financial & managerial accounting. Cengage Learning.

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Yhip, T. M., & Alagheband, B. (2020). Financial Statement Analysis. In The Practice of Lending (pp. 47-94). Palgrave Macmillan, Cham.