財務(wù)指標(biāo)的講義非常不錯共同分享（53）

1、RATIO ANALYSIS1Ratio OverviewRatios provide a method of standardization2Ratio OverviewAs mentioned ratios provide a method of standardization but more importantly - they provide a profile of firms economic characteristics and competitive strategies.3Ratio OverviewAlthough extremely valuable as analy

2、tical tools, financial ratios also have limitations. They can serve as screening devices , indicate areas of potential strength or weakness, and reveal matters that need further investigation.Should be used in combination with other elements of financial analysis.There is no one definitive set of ke

3、y ratios; There is no uniform definition for all ratios; and there is no standard that should be met for each ratio.There are no rules of thumb that apply to the interpretation of financial ratios.4Caveatseconomic assumptions - linearity assumptionbenchmarkmanipulation timing accounting methodsnegat

4、ive numbers5Common Size Financial StatementsDifferences in firm size may confound cross sectional and time series analyses. To overcome this problem, common size statements are used.A common size balance sheet expresses each item on the balance sheet as a percentage of total assetsA common size inco

5、me statement expresses each income statement category as a percentage of total sales revenues6A common size income statement7Four categories of ratiosActivity ratios the liquidity of specific assets and the efficiency of managing assetsLiquidity ratios firms ability to meet cash needs as they ariseD

6、ebt and Solvency ratios the extent of a firms financing with debt relative to equity and its ability to cover fixed chargesProfitability ratios the overall performance of the firm and its efficiency in managing investment (assets, equity, capital)These categories are not distinct as we shall seeActi

7、vity LiquidityActivity ProfitabilitySolvency Profitability 8A. ACTIVITY RATIOS:ASSET MANAGEMENT & EFFICIENCY9ACTIVITY RATIOS: ASSET MANAGEMENT & EFFICIENCYShort-term (operating) activity ratios:Inventory Turnover Ratio COGS/(Average inventory)Receivable Turnover RatioSales/(Average accounts receivab

8、le) 10a) Inventory Turnover Ratio COGS/(Average inventory) Measures efficiency of firm in managing and selling inventory. High ratio represent fewer funds tied up in inventories - efficient management. Inventory does not languish on shelves.High turnover can also represent understocking and lost ord

9、ers. Low turnover can also represent legitimate reasons such as preparing for a strike, increased demand, etc. Ratio depends on industry - (perishable goods etc.)Average # of days inventory in stock = 365 / (Inventory Turnover Ratio)11b) Receivable Turnover Ratio Sales/(Average receivables)How many

10、times receivables are turned into cash Relatively low turnover may indicate inefficiency, cutback in demand, or earning manipulation.(When available, the figure for credit sales can be substituted for net sales since credit sales produce the receivables.)Average # of days receivables outstanding = 3

11、65 / (A/R Turnover Ratio)Provides information about the firms credit policyShould be compared with the firms stated policy (i.e., if firm policy is 30 days and average collection period is 60 days, company is not stringent in collection effort.)12Short-term (operating) activity ratios:High/low relat

12、ive to the industry should be examined (i.e., high receivable turnover might indicate lost sales to competitors as credit terms too tight).Low turnover ratios may implyfirms income overstatedfuture production cutbacksfuture liquidity problems13ACTIVITY RATIOS: ASSET MANAGEMENT & EFFICIENCYLong-term

13、(investment) activity ratios:Fixed Assets Turnover Ratio =Sales/ Average fixed assetsTotal Assets Turnover Ratio =Sales/ Average total assets Fixed Asset and Total Asset Turnover are measures of the relation between sales and investments in long-lived assets; i.e. the efficiency in the use of these

14、assets. How much of an investment is required to generate a given level of sales?14Long-term (investment) activity ratiosWhen the asset turnover ratios are low, relative to the industry or historical record, either the investment in assets is too heavy and/or sales are sluggish. There may, however,

15、be plausible explanations: the firm may have taken an extensive plant modernization. 15B. LIQUIDITY RATIOS:SHORT TERM SOLVENCY16Importance of Working Capital Operating CycleGoal: Shorten the cycle17Activity ratios as measure(s) of liquidityThe Operating cycle and the Cash Cycle (Net Trade Cycle)Oper

16、ating cycle the number of days it takes for the firms operations to “convert into cash is calculated asthe number of days inventory is in stock 365/inventory turnoverPLUSthe number of days receivable are outstanding 365/Receivable turnoverNote that for a manufacturing company, the length of the oper

17、ating cycle must also consider the time that money is tied up by production. (Box 3-1) 18Activity ratios as measure(s) of liquidityThe Operating cycle and the Cash Cycle (Net Trade Cycle)Cash cycle the number of days a companys cash is tied up by its current operating cycle is calculated asOperating

18、 cycleLESSthe # of days accounts payable are outstanding (365 /A/P Turnover) A/P Turnover = Purchases/Average accounts payablepurchases are approximated by COGS plus ending inventories less beginning inventories.19Cash CycleOperating and Cash CyclesCash Cycle = Circumference of Shaded Area20Cash Cyc

19、le# of days cash tied up # of days inventory (365/Inventory T/O)+ # of days A/R (365/A/R T/O)= Operating cycle- # of days A/P (365/A/P T/O)= Cash cycle“Cash cycle can provide interesting insight as for certain e-commerce companies (especially e-tailers) “float exists negative cash cycle 21Amazon Cas

20、h Cycle22Dell Source: Dell Annual Report January 31, 2004Key RatiosFISCAL-YEAR ENDED (Jan/Feb)2004 2003 2002 2001 2000Days of supply in inventory 3 3 4 5 6Days of sales outstanding 31 28 29 32 34Operating cycle (subtotal not in Dell A/R) 34 31 33 37 40Days in accounts payable 70 68 69 58 58Cash conv

21、ersion cycle (36) (37) (36) (21) (18)23Dollar General Estimating cost of cash cycleAnnual sales = $3.2 billion; Daily average = $8.8 million ($3.2/365)Since Cost of sales is 72% of sales, company finances (.72x8.8=) $6.4 million for each day of its cash cycleCompanys cash cycle = 101 days. Therefore

22、 company “carries 101 x 6.4 = $646.4 million on average.At 7% interest;Annual cost = $45.2 millionDaily cost = $448,000/day of cash cycleEach day the cash cycle is reduced, the company saves almost a half million dollars - $448,000 !24Working capital ratiosShort-term liquidity analysis compares the

23、firms cash resources with its cash obligations. These ratios measure short term solvency- the ability of the firm to meet its debt requirements as they come due.Cash resources can be measured by either:the sum of the current cash balance and potential sources of cash, or(net) cash flows from operati

24、onsCash obligations can be measured by either:Current obligations requiring cash, orCash outflows arising from operations25LIQUIDITY RATIOSThe following table summarizes the ratios commonly used to measure the relationship between resources and obligationsNumerator DenominatorCash Resources Cash Obl

25、igationsLevel Current assets Current liabilitiesFlow Cash flow from operationsCash outflows for operationsConceptually, the ratios differ as to whether levels (amounts shown on the balance sheet; or flows (cash inflows and outflows) are used to gauge the relationship .26Three ratios compare levels o

26、f cash resources with current liabilities as the measure of cash obligations Current RatioCurrent assets / Current liabilitiesQuick Ratio(Cash +Marketable securities + A/R)/Current liabilitiesCash Ratio(Cash + Marketable securities)/Current liabilities27Dell (revisited) Source: Dell Annual Report Ja

27、nuary 31, 2004Key RatiosFISCAL-YEAR ENDED (Jan/Feb)2004 2003 2002 2001 2000Days of supply in inventory 3 3 4 5 6Days of sales outstanding 31 28 29 32 34Operating cycle (subtotal not in Dell A/R) 34 31 33 37 40Days in accounts payable 70 68 69 58 58Cash conversion cycle (36) (37) (36) (21) (18)28Two

28、other ratios combine flows with resources/obligationsCash Flow from Operations RatioCFO / Current liabilitiesDefensive Interval365 x Cash + Marketable Securities + A/R Projected Expenditures29Cash burn ratioOriginally developed in the sixties, the defensive interval never caught on with the analyst

29、community. Recently, however it has enjoyed a resurgence in popularity in the form of the cash burn rate.Applied for the most part to start-up and rapidly growing technology companies, the ratio measures how much cash the firm consumes over a given period of time Estimates the number of days (defens

30、ive interval) the company can survive with the cash it has raised from its investors (private placement or IPO). For start-up companies with no revenues, only cash expenditures matter.For such companies, the ratio, in effect, measures how much time the company has until it must have a working busine

31、ss model. 30Excerpt from: “Net Worth by Peter Elstrom, Business Week E.BIZ, September 18, 2000; P. EB 11431Follow-up on above companies Company18-Sep29-Dec% Change 52 week HighEn Pointe-60.9% Acclaim-98.4% $ 6.63 GC qualification issued 11/29Streamline-99.7% Ceased operations 11/13IdeaMall-68.4% Wav

32、o-95.2% Auditor resigns 10/29NASDAQ3,726.52 2,470.52-33.7%32Cash burn ratio (2000)Cash (+M/S) available Cash needs Cash Needs = CFO; or CFO + capital expenditureAmazonUsing (CFO + capital expenditure)Annual (2000) 822 + 278 = 1,100=4.2 yrs130+135 265 Quarter (1st quarter 2001) 447 + 196 = 643=1.5 qt

33、rs 407 + 19 426Can they be so far apart?33Cash burn ratio (2001)Cash (+M/S) available Cash needs Cash Needs = CFO; or CFO + capital expenditureAmazonUsing (CFO + capital expenditure)Annual (2001) 540 + 456 = 996=5.6 yrs 120+50 170 Quarter (1st quarter 2002) 297 + 449 = 746=3.0 qtrs 241 + 5 246Can th

34、ey be so far apart?34GENERAL ELECTRIC CO.Working Capital Trends - Cash Flow1991 199435C. DEBT & SOLVENCY RATIOS:DEBT FINANCING AND COVERAGE36DEBT & SOLVENCY RATIOS: DEBT FINANCING AND COVERAGEThe use of debt involves risk because debt carries fixed commitments (interest charges & principal repayment

35、).While debt implies risk, it also introduces the potential for increased benefits to the firms owners (leverage effect illustrated in next section).There are other fixed commitments, such as lease payments, that are similar to debt and should be considered 37Debt Ratios Debt to Capital = Debt/(Debt

36、 + Equity)Debt to Assets =Debt/Total assetsDebt to Equity =Debt/Shareholders equity(Debt can include trade debt - usually it does not)38Coverage RatiosRevenues$ 700,000Expenses 600,000EBIT 100,000Interest Expense 20,000EBT 80,000Taxes (30%) 24,000Net Income 56,000Interest coverage ratios measure the

37、 ability of the company to “cover its required interest payments out of income. Since interest payments are tax deductible, the appropriate income measure is EBIT. Times interest earned = Operating profit (EBIT)Interest expensei.e. 100,000 = 5 20,000The larger the ratio, the more the interest paymen

38、ts are “protected.In this case EBIT is 5x the required payments. Income can fall (5-1)/5 = 80% before the interest payments are jeopardized. 39Coverage RatiosFixed charge coverage = Operating profit + Lease payments Interest expense + Lease paymentsNote: Lease payments are added to numerator because

39、 they were deducted in order to arrive at operating profits.Coverage ratios can also be calculated on a cash basise.g. Interest coverage CFO + Tax paid + Interest paid Tax paidNote: cash tax and cash interest paid are required disclosures under FASB 95: SoCF 40Other Solvency ratios using CFO Capital

40、 Expenditure ratio = CFO/Capital expendituresMeasures firms ability to generate cash flows to cover capital expenditures. It is a measure of Free Cash Flows in ratio form. (If CFO 1 ; FCF is +ve) CFO to Debt ratio = CFO/DebtMeasures firms ability to “cover its debt with its CFO.41Debt covenants and

41、SolvencyDebt covenants are often expressed in terms of financial ratios. It is important to examine the proximity to a technical violation for two reasons:(1)it implies potential costs of renegotiation; and(2)it implies potential earnings management.42D. PROFITABILITY RATIOS: OVERALL EFFICIENCY & PE

42、RFORMANCE43Profitability ratios Gross Profit Margin = Gross profit/SalesMeasures the ability of the firm to control costs of inventories and/or manufacturing cost and to pass along price increases through sales to customers. Operating Profit Margin = Operating profit/SalesMeasures overall operating

43、efficiency nature of firms administrative and marketing overhead Net Profit Margin = Net Income/SalesMeasure of overall profitability after all items included (revenues, expenses, tax, interest, etc.). It is an overall measure of a firms ability to control the level of expenses relative to revenues

44、generated.“By-product of Common size statements44Return on Investment (ROI) measures- ROA & ROEROA - Rate of return on assets Net income + Interest expense (net of income tax savings)Average total assetsBy adding back interest expense, we actually measure the rate of return on assets as if the firm

45、is fully financed with equity. This ratio provides a performance measure that is independent of the financing of the firms assets.ROE - Rate of Return on Common Shareholders Equity Net income Average common equity45Relationship of ROA and ROE to Providers of Investment BaseEffects of LeverageSchemat

46、ically, we can show the relationship as Debt + Assets Operating Income Interest = Net IncomeEquity ROAROERevenues$ 700,000Expenses 600,000EBIT 100,000Interest Expense 20,000EBT 80,000Taxes (30%) 24,000Net Income 56,000How is this income allocated?46Numerical illustration:Assume a company has Assets

47、of $600,000 financed by $400,000 of equity and $200,000 of debt. Also assume the following income statementThat is the $70,000 generated by the assets is distributed as follows:To the debt holder $14,000 To the equity shareholder 56,000 $70,000Affects on Leverage for Equityholder* Return on $400,000

48、Invests 400,000 earns 11.67% 46,667 / 400,000 = 11.67%On borrowed funds of 200,000 earns 11.67% but pays 7%. Therefore earns spread of 4.67%; (11.67%-7%) x 200,000 = 9,333 / 400,000 = 2.33%Total 56,000 / 400,000 = 14.00%*This relationship can be expressed (see following section) asROE = ROA + (ROA-C

49、ost of Debt) x D/E = 11.67% + (11.67%-7%) x (200,000/400,000) *Alternatively , Net Income + Interest (1-t) = 56,000 + 20,000 (.7) = $70,00047Disaggregation of ROATo simplify matters, we illustrate ROA on a pre-tax basis.ROA = EBIT/Assets = EBIT/Sales x Sales/Assets = Profitability xActivityCommon Size Inventory T/O I/S Components A/R T/O Fixed Asset T/O4849Dis