财务报表分析答案8.docx

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1、Ch叩ter8ReturnonInvestedCapitalandProfitabilityAnalysisREVIEWReturnoninvestedcapitalisimportantinouranalysisoffinancialstatements.Financialstatementanalysisinvolvesourassessingbothriskandreturn.Thepriorthreechaptersfocusedprimarilyonrisk,whereasthischapterextendsouranalysistoreturn.Returnoninvestedca

2、pitalreferstoacompanysearningsrelativetoboththelevelandsourceoffinancing.Itisameasureofacompanyssuccessinusingfinancingtogenerateprofits,andisanexcellentmeasureofoperatingperformance.Thischapterdescribesreturnoninvestedcapitalanditsrelevancetofinancialstatementanalysis.Wealsoexplainvariationsinmeasu

3、rementofreturnoninvestedcapitalandtheirinterpretation.Wealsodisaggregatereturnoninvestedcapitalintoimportantcomponentsforadditionalinsightsintocompanyperformance.Theroleoffinancialleverageanditsimportanceforreturnsanalysisisexamined.Thischapterdemonstrateseachoftheseanalysistechniquesusingfinancials

4、tatementdata.OUTLINE ImportanceofReturnonInvestedCapitalMeasuringManagerialEffectivenessMeasuringProfitabilityMeasuringforPlanningandControl ComponentsofReturnonInvestedCapitalDefiningInvestedCapitalAdjustmentstoInvestedCapitalandIncomeComputingReturnonInvestedCapital AnalyzingReturnonNetOperatingAs

5、setsDisaggregatingReturnonNetOperatingAssetsRelationbetweenProfitMarginandAssetTurnoverProfitMarginAnalysisAssetTurnoverAnalysis AnalyzingReturnonCommonEquityDisaggregatingReturnonCommonEquityFinancialLeverageandReturnonCommonEquityAssessingGrowthinCommonEquityANALYSISOBJECTIVES Describetheusefulnes

6、sofreturnmeasuresinfinancialstatementanalysis. Explainreturnoninvestedcapitalandvariationsinitscomputation. Analyzereturnonnetoperatingassetsanditsrelevanceinouranalysis. Describedisaggregationofreturnonnetoperatingassetsandtheimportanceofitscomponents. Describetherelationbetweenprofitmarginandturno

7、ver. Analyzereturnoncommonshareholdersequityanditsroleinouranalysis. Describedisaggregationofreturnoncommonshareholdersequityandtherelevanceofitscomponents. Explainfinancialleverageandhowtoassessacompanyssuccessintradingontheequityacrossfinancingsources.QUESTIONS1. Thereturnthatisachievedinanyoneper

8、iodontheinvestedcapitalofacompanyconsistsofthereturns(andlosses)realizedbyitsvarioussegmentsanddivisions.Inturn,thesereturnsaremadeupoftheresultsachievedbyindividualproductlinesandprojects.Awell-managedcompanyexercisesrigorouscontroloverthereturnsachievedbyeachofitsprofitcenters,anditrewardsthemanag

9、ersonthebasisofsuchresults.Specifically,whenevaluatingnewinvestmentsinassetsorprojects,managementwillcomputetheestimatedreturnsitexpectstoachieveandusetheseestimatesasabasisforitsdecisiontoinvestornot.2. Profitgenerationisthefirstandforemostpurposeofacompany.Theeffectivenessofoperatingperformancedet

10、erminestheabilityofthecompanytosurvivefinancially,toattractsuppliersoffunds,andtorewardthemadequately.Returnoninvestedcapitalistheprimemeasureofcompanyperformance.Theanalystusesitasanindicatorofmanagerialeffectiveness,and/orameasureofthecompanysabilitytoearnasatisfactoryreturnoninvestment.3. Ifthein

11、vestmentbaseisdefinedascomprisingnetoperatingassets,thennetoperatingprofit(e.g.,beforeinterest)aftertax(NOPAT)istherelevantincomefiguretouse.Theexclusionofinterestfromincomedeductionsisduetoitsbeingregardedasapaymentfortheuseofmoneyfromthesuppliersofdebtcapital(inthesamewaythatdividendsareregardedas

12、apaymenttosuppliersofequitycapital).NOPATistheappropriateamounttomeasureagainstnetoperatingassetsasbothareconsideredtobeoperating.4. First,themotivationforexcludingnonproductiveassetsfrominvestedcapitalisbasedontheideathatmanagementisnotresponsibleforearningareturnonnon-operatinginvestedcapital.Seco

13、nd,theexclusionofintangibleassetsfromtheinvestmentbaseisoftenduetoskepticismregardingtheirvalueortheircontributiontotheearningpowerofthecompany.UnderGAAP,intangiblesarecarriedatcost.However,iftheircostexceedstheirfutureutility,theyarewrittendown(ortherewillbeanuncertaintyexceptionregardingtheircarry

14、ingvalueintheauditorsopinion).Theexclusionofintangibleassetsfromtheassetbasemustbebasedonmoresubstantialevidencethanamerelackofunderstandingofwhattheseassetsrepresentoranunsupportedsuspicionregardingtheirvalue.Thisimpliesthatintangibleassetsshouldgenerallynotbeexcludedfrominvestedcapital.5. Thebasic

15、formulaforcomputingthereturnoninvestmentisnetincomedividedbytotalinvestedcapital.Wheneverwemodifythedefinitionoftheinvestmentbaseby,say,omittingcertainitems(liabilities,idleassets,intangibles,etc.)wemustalsoadjustthecorrespondingincomefiguretomakeitconsistentwiththemodifiedassetbase.6. Therelationof

16、netincometosalesisameasureofoperatingperformance(profitmargin).Therelationofsalestototalassetsisameasureofassetutilizationorturnover-ameansofdetermininghoweffectively(intermsofsalesgeneration)theassetsareutilized.Bothofthesemeasures,profitmarginaswellasassetutilization,determinethereturnrealizedonagiveninvestmentbase.Salesareanimportantfactorinbothoftheseperformancemeasures.7. Profitmargin,althoughimportant,isonlyoneaspecto