财务管理基础斯坦利布洛克Chapter(3)

Chapter3financialratioanalysisGuRenSouthChinaUniversityofTechnology2013.9HowtoUnderstandingtheBusiness?BusinessStrategyOperatingDecisionsTransactionsFinancialStatementsTHREETYPESOFFINANCIALSTATEMENTINFORMATIONPastPerformancePresentConditionFuturePerformanceIncome,salesvolume,cashflows,return-on-investments,EPS,P/B,P/E,P/FCF.Assets,debt,inventory,variousratios.Salesandearningstrendsaregoodindicatorsoffutureperformance.UnderstandingTheBusiness–FinancialStatementAnalysisUnderstandingTheBusiness–FinancialStatementAnalysisExaminesasinglecompanytoidentifytrendsovertime.Financialstatementanalysisisbasedoncomparisons.Timeseries/TrendanalysisComparisonwithsimilarcompaniesProvidesinsightsconcerningacompany’srelativeperformance.UnderstandingTheBusiness–FinancialStatementAnalysisFinancialstatementanalysisisusingRatioAnalysis,orPercentageAnalysis,whichisusedtoexpresstheproportionaterelationshipbetweentwodifferentamounts.Financialratios(Suchdataisprovidedbyvariousorganizations):Usedtoweighandevaluatetheoperatingperformanceofafirm;Usedtocompareperformancerecordasagainstsimilarfirmsintheindustry;Analyzingratiosandnumericalcalculations.Chapter3financialratioanalysisI.FinancialRatiosQ:HowtouseFinancialRatios?•Short-termlenders(bankersortradecreditor)–liquiditybecausetheirconcerniswiththefirm'scurrentabilitytopayshort-termobligationsastheycomedue.•Long-termlenders(bondholders)–leveragebecausetheyareconcernedwiththerelationshipofdebttototalassets.Theyalsowillexamineprofitabilitytoinsurethatinterestpaymentscanbemade.–profitability,withsecondaryconsiderationgiventodebtutilization,liquidity,andotherratios.Sincestockholdersaretheultimateownersofthefirm,theyareprimarilyconcernedwithprofitsorthereturnontheirinvestment.•Stockholders&PotentialinvestorsQ:HowtouseFinancialRatios?•Financialmanagers–Alltheratios.Profitability,liquidity,debt,asset.FinancialStatementforRatioAnalysisQ:HowtounderstandthefourCategoriesofRatios?•ProfitabilityRatios•AssetUtilizationRatios•LiquidityRatios•DebtUtilizationRatios•Supplement:CashRatios•Supplement:LeverageProfitabilityRatiosProfitabilityRatios-DuPontSystemofAnalysis•Asatisfactoryreturnonassetsmightbederivedthrough:–Ahighprofitmargin–Arapidturnoverofassets(generatingmoresalesperdollarofitsassets)–OrbothReturnonassets(investment)=Profitmargin×AssetturnoverProfitabilityRatios-DuPontSystemofAnalysis(cont’d)•Asatisfactoryreturnonequitymightbederivedthrough:–Ahighreturnontotalassets–Agenerousutilizationofdebt–OracombinationofbothReturnonequity=Returnonassets(investment)(1–Debt/Assets)ProfitabilityRatios-DuPontSystemofAnalysis(cont’d)ThedifferenceofROAandROE•ThebigfactorthatseparatesROEandROAisfinancialleverage,ordebt.–Ifacompanycarriesnodebt,itsshareholders'equityanditstotalassetswillbethesame.–IfROEROA,financialleverageordebtProfitabilityRatios-DuPontSystemofAnalysis(cont’d)Case:ReturnofWal-MartversusMacy’susingtheDuPontmethodofanalysis,2007AssetUtilizationRatios•TheseratiosrelatethebalancesheettotheincomestatementAssetUtilizationRatios(cont’d)LiquidityRatiosDebtUtilizationRatios•MeasurestheprudenceofthedebtmanagementpoliciesofthefirmDebtUtilizationRatios(cont’d)•Fixedchargecoveragemeasuresthefirm’sabilitytomeetthefixedobligations•InterestpaymentsalonearenotconsideredIncomebeforeinterestandtaxes………………..$550,000Leasepayments……………………………………$50,000Incomebeforefixedchargesandtaxes…………$600,000OtherCashFlowRatios:1.CashCurrentDebtCoverage=(CashFlowfromOperations–CashDividends)/CurrentLiabilities--company’sabilitytogenerateresourcestomeetcurrentliabilities2.OperationCashFlowRatio=CashFlowfromOperations/AverageTotalLiabilities3.CashInterestCoverage=(cashflowfromoperations+interestpaid+taxpaid)/interestpaidOtherCashFlowRatios:4.CashFlowMarginRatio=Cashflowfromoperatingcashflows/Netsales5.CashFlowReturnonInvestment(CFROI)=cashflow/marketrecapitalizationRatioAnalysisIndustryaverageorthebestoneofthisindustry.Suitabletosmall-scaledcompany.Inflationimpact.Seasonalreasons.Usingdifferentaccountingmethods.thinkofthefactorswhichwouldmakedistortionsonthefinancialreportingofthefirm.Chapter3-financialratioanalysisII.Interpretingratios(1)ImpactofInflationonFinancialAnalysis•Inflation–Revenueisstatedincurrentdollars–Plant,equipment,orinventorymayhavebeenpurchasedatlowerpricelevels–Profitsmaybemoreafunctionofincreasingpricesthanduetogoodperformance(2)ComparisonofReplacementandHistoricalCostAccounting•Reducesincome•Increasesassets•Returnonassetsdropsbecauseassetsincreasewhilenetincomedrops.•Returnonequitydropsfornetincomedecreasingbutnochangesinequity.•Debt-to-assetratioisloweredsincedebtdoesnotinflate.•Decliningincomecausesinterestcoverageratiotodecline.Replacementcost:(3)ImpactofDisinflationonFinancialAnalysis•Disinflation–Financialassetssuchasstocksandbondshavethepotentialtodowell–encouraginginvestors–Tangibleassetsdonothavethepotential•Deflation–Actualreductionofpricesaffectingeverybodyduetobankruptciesanddecliningprofits(4)OtherElementsofDistortioninReportedIncome•Effectofchangingprices•Reportingofrevenues–recognizere