财务分析与证券定价(英文)chapter11

Chapter11TheAnalysisofProfitabilityLinksChapters8,9and10reformulatedthefinancialstatementstopreparethemforanalysisLinktoPreviousChaptersThisChapterLinktoNextChapterLinktoWebPageWhatarethefinancialstatementdriversofROCE?Howisoperatingprofitabilityanalyzed?WhataretheeffectsoffinancialandoperatingliabilityleverageonROCE?Howareborrowingcostsanalyzed?ThischapterlaysouttheanalysisofprofitabilitythatisnecessaryforforecastingfutureprofitabilityandvaluationChapter12laysouttheanalysisofgrowth,tocompletetheanalysisofthefinancialstatementsWhatyouwilllearnfromthischapter•Howreturnoncommonequity(ROCE)isbrokendownintoitsdrivers•Howfinancialleverageaffectsshareholderprofitability•Howoperatingliabilityleverageaffectstheprofitabilityofoperations•ThedifferencebetweenReturnonNetOperatingAssets(RNOA)andReturnonAssets(ROA)•HowprofitmarginsandassetturnoversdriveRNOA•Howborrowingcostsareanalyzed•Howprofitabilityanalysisisusedtoask“whatif”questionsinsensitivityanalysisTheFocus:Accounting-BasedValuation•Thetaskistodeterminepremiumsoverbookvalue(orequivalently,theP/Bratio)•WhatwillfutureROCEbe?•Whatwillbethegrowthinthefuture?•Pointofdeparture:CurrentROCEandgrowth•HowwillfutureROCEandgrowthbedifferentfromcurrentROCE?ThischapteranalyzescurrentprofitabilityThenextchapteranalyzesgrowthForecastingandtheAnalysisofCurrentProfitability1.Establishthepresent:Analysisofprofitability(inthischapter)Determinethecurrentprofitability(ROCE)andthefactorsthatinfluencetheprofitability2.Determinetransitionfrompresenttofuture:Projectingfutureprofitability(inPartIII)DeterminefactorsthatinfluencefutureprofitabilityanddescribehowthefuturewillbedifferentfromthepresentThesecorrespondtosteps2and3offundamentalanalysisThereformulationofthebalancesheetandincomestatementhasputthemintoaformtocarryoutstep2andtousethemtoforecastthefutureinstep3CuttingtotheCore:ROCEDriversROCEisdecomposedintodriversoverthreelevelsofanalysis:1.EffectsofLeverage1.AnalysisofOperatingProfitability1.AnalysisofNetBorrowingCostsDuetoformattingrestrictions,pleasemanuallyreplacethispagewithhardcopyofslidefromfile:AnalysisofProfitability(slidechart)[windowsname]analys~1.ppt[dosname]First-LevelBreakdown:AnalysisofEffectsofFinancialLeverage(FLEV)So,ROCEisaweightedreturntooperatingactivitiesandfinancingactivities:or,RNOA=OI(Aftertax)/NOA(ReturnonNetOperatingAssets)FLEV=NFO/CSE(FinancialLeverage)NBC=NFE(aftertax)/NFO(NetBorrowingCost)SPREAD=RNOA–NBC(OperatingSpread)NFONOAExpense)FinancialNet-(OICSEAverageIncomeiveComprehensROCENBCxCSENFO-RNOAxCSENOAROCE]NBC-RNOAx[FLEVRNOAROCESpreadROCE=RNOA+[FLEVxSPREAD]-4%-2%0%2%4%6%8%0.000.250.500.751.001.251.501.752.00FLEVDifferencebetweenROCEandRNOA(ROCE-RNOA)SPREAD=6%SPREAD=4%SPREAD=2%SPREAD=1%SPREAD=0%SPREAD=-1%SPREAD=-2%HowFinancialLeverageExplainstheDifferenceBetweenROCEandRNOAFinancialLeverage:GeneralMills,Inc.GeneralMills,alargemanufacturerofpackagedfoods,hashadconsiderablestockrepurchasesovertheyears.Attheendoffiscal1998commonshareholderequitywasonly$190.2milliononnetoperatingassetsof$2.251billion.Itsfinancialleveragewasahuge5.745,basedonaveragebalancesheetamounts.Thefirm’sROCEfor1998was121.6%.Furtheranalysisrevealsthatthisveryhighnumberisdrivenbythehighleverage:ROCE=RNOA+[FLEVx(RNOANBC)]121.6%=21.6%+[5.745x(21.6%4.2%)]ROCEcanexaggerateunderlyingoperationalprofitability:RNOAis21.6%butthehighfinancialleverage,combinedwithaSPREADoveraborrowingcostof4.2%,yieldsamuchhigherROCE.BewareoffirmsboastinghighROCE:isitdrivenbyfinancialleverage?AWhat-IfQuestion:WhatiftheRNOAatGeneralMillsfellto3%?WhatwouldbetheeffectonROCE?TheansweristhattheROCEwouldfallto-3.9%:-3.9%=3.0%+[5.745x(3.0%4.2%)]TheunfavorableleveragewouldproduceanegativeROCEonapositiveRNOA.MicrosoftCorphasbeenveryprofitable.Forfiscal1998thefirmreportedanROCEof36.3%onaveragecommonequityof$13.702billion.ButMicrosofthadnofinancingdebtotherthan$980millionofconvertiblepreferredstock.Andithadconsiderablefinancialassetsof$11.447billionfromcashgeneratedfromitsoperations.Thereturnonaveragenetfinancialassetswas8.0%(asignificantportionfromunrealizedgainsonfinancialassets).ThereportedROCEmaskstheprofitabilityofoperations:TheRNOAof179.4%isweighteddownbyreturnonfinancingactivitiesintheoverallROCE.AWhat-IfQuestion:Microsofthasregularstockrepurchases.Infiscal1998thecompanyused$2.796billionofitsfinancialassetstorepurchasestock.WhatwouldtheROCEhavebeenhaditnotundertakenthestockrepurchase?Theanswer:With$2.796billionmoreinaveragefinancialassetsandcommonequity,theNFAtoCSEratiowouldhavebeen0.863ratherthan0.835,andtheROCEwouldhavebeen:31.5%=179.4%[0.863x(179.4%8.0%)]Stockrepurchases(anddividends)increaseROCE.FinancialLeverage:Microsoft,Corp.%)].0.8%4.179(x835.0[%4.179%3.36RNFARNOAxCSENFARNOAROCERNFA-RNOAxCSENFA-RNOARNFAxCSENFARNOAxCSENOAROCETheEffectsofOperatingLiabilityLeverage(OLLEV)OperatingliabilitieslevertheReturnonNetOperatingAssetsWhatwouldbetheoperatingprofitabilitywithoutoperatingliabilities?whereImplicitInterestonOperatingLiabilities=Short-termBorro