财务管理Chap003.ppt

Financial Statements Analysis and Long-Term PlanningChapter 33-1Key Concepts and SkillsoKnow how to standardize financial statements for comparison purposesoKnow how to compute and interpret important financial ratiosoBe able to develop a financial plan using the percentage of sales approachoUnderstand how capital structure and dividend policies affect a firms ability to grow3-2Chapter Outline3.1 Financial Statements Analysis3.2 Ratio Analysis3.3 The Du Pont Identity3.4 Financial Models3.5 External Financing and Growth3.6 Some Caveats Regarding Financial Planning Models3-33.1 Financial Statements AnalysisoCommon-Size Balance SheetsnCompute all accounts as a percent of total assetsoCommon-Size Income StatementsnCompute all line items as a percent of salesoStandardized statements make it easier to compare financial information, particularly as the company grows.oThey are also useful for comparing companies of different sizes, particularly within the same industry.3-43.2 Ratio AnalysisoRatios also allow for better comparison through time or between companies.oAs we look at each ratio, ask yourself:nHow is the ratio computed?nWhat is the ratio trying to measure and why?nWhat is the unit of measurement?nWhat does the value indicate?nHow can we improve the companys ratio?3-5Categories of Financial RatiosoShort-term solvency or liquidity ratiosoLong-term solvency or financial leverage ratiosoAsset management or turnover ratiosoProfitability ratiosoMarket value ratios3-6Computing Liquidity RatiosoCurrent Ratio = CA / CLn708 / 540 = 1.31 timesoQuick Ratio = (CA Inventory) / CLn(708 - 422) / 540 = .53 timesoCash Ratio = Cash / CLn98 / 540 = .18 times3-7Computing Leverage RatiosoTotal Debt Ratio = (TA TE) / TAn(3588 - 2591) / 3588 = 28%oDebt/Equity = TD / TEn(3588 2591) / 2591 = 38.5%oEquity Multiplier = TA / TE = 1 + D/En1 + .385 = 1.3853-8Computing Coverage RatiosoTimes Interest Earned = EBIT / Interestn691 / 141 = 4.9 timesoCash Coverage = (EBIT + Depreciation + Amortization) / Interestn(691 + 276) / 141 = 6.9 times3-9Computing Inventory RatiosoInventory Turnover = Cost of Goods Sold / Inventoryn1344 / 422 = 3.2 timesoDays Sales in Inventory = 365 / Inventory Turnovern365 / 3.2 = 114 days3-10Computing Receivables RatiosoReceivables Turnover = Sales / Accounts Receivablen2311 / 188 = 12.3 timesoDays Sales in Receivables = 365 / Receivables Turnovern365 / 12.3 = 30 days3-11Computing Total Asset TurnoveroTotal Asset Turnover = Sales / Total Assetsn2311 / 3588 = .64 timesnIt is not unusual for TAT 1, especially if a firm has a large amount of fixed assets.3-12Computing Profitability MeasuresoProfit Margin = Net Income / Salesn363 / 2311 = 15.7%oReturn on Assets (ROA) = Net Income / Total Assetsn363 / 3588 = 10.1%oReturn on Equity (ROE) = Net Income / Total Equityn363 / 2591 = 14.0%oEBITDA Margin = EBITDA / Salesn967 / 2311 = 41.8%3-13Computing Market Value MeasuresoMarket Capitalization = $88 per share x 33 million shares = 2904 millionoPE Ratio = Price per share / Earnings per sharen88 / 11 = 8 timesoMarket-to-book ratio = market value per share / book value per sharen88 / (2591 / 33) = 1.12 timesoEnterprise Value (EV) = Market capitalization + Market value of interest bearing debt cashn2904 + (196 + 457) 98 = 3465oEV Multiple = EV / EBITDAn3465 / 967 = 3.6 times3-14Using Financial StatementsoRatios are not very helpful by themselves: they need to be compared to somethingoTime-Trend AnalysisnUsed to see how the firms performance is changing through timeoPeer Group AnalysisnCompare to similar companies or within industriesnSIC and NAICS codes3-153.3 The Du Pont IdentityoROE = NI / TEoMultiply by 1 and then rearrange:nROE = (NI / TE) (TA / TA)nROE = (NI / TA) (TA / TE) = ROA * EMoMultiply by 1 again and then rearrange:nROE = (NI / TA) (TA / TE) (Sales / Sales)nROE = (NI / Sales) (Sales / TA) (TA / TE)nROE = PM * TAT * EM3-16Using the Du Pont IdentityoROE = PM * TAT * EMnProfit margin is a measure of the firms operating efficiency how well it controls costs.nTotal asset turnover is a measure of the firms asset use efficiency how well it manages its assets.nEquity multiplier is a measure of the firms financial leverage.3-17Calculating the Du Pont IdentityoROA = 10.1% and EM = 1.39nROE = 10.1% * 1.385 = 14.0%oPM = 15.7% and TAT = 0.64nROE = 15.7% * 0.64 * 1.385 = 14.0%3-18Potential ProblemsoThere is no underlying theory, so there is no way to know which ratios are most relevant.oBenchmarking is difficult for diversified firms.oGlobalization and international competition makes comparison more difficult because of differences in accounting regulations.oFirms use varying accounting procedures.oFirms have different fiscal years.oExtraordinary, or one-time, events3-193.4 Financial ModelsoInvestment in new assets determined by capital budgeting decisionsoDegree of financial leverage determined by capital structure decisionsoCash paid to shareholders determined by dividend policy decisionsoLiquidity requirements determined by net