Bài giảng Investment - chapter 19: Financial Statement Analysis

CHAPTER 19Financial Statement AnalysisPurpose Tools UsedStatement analysisRatio analysisLimitationsOverviewBalance SheetCommon SizedTrend or IndexedIncome StatementCommon SizedTrend or IndexedStatement of Cash FlowsFinancial StatementsTable 19.1 Consolidated Statement of Income for Hewlett-Packard, 2006Table 19.2 Consolidated Balance Sheet for Hewlett-Packard, 2006 Table 19.3 Statement of Cash Flows for Hewlett-Packard, 2006Accounting Versus Economic EarningsEconomic earningsSustainable cash flow that can be paid to stockholders without impairing productive capacity of the firmAccounting earningsAffected by conventions regarding the valuation of assetsProfitability MeasuresROE: measures the profitability for contributors of equity capitalROA: measures the profitability for all contributors of capitalLeverage has a significant effect on profitability measuresTable 19.4 Nodett’s Profitability over the Business Cycle Table 19.5 Impact of Financial Leverage on ROEROE, ROA and LeverageROE = Net ProfitPretax ProfitxPretax Profit EBITxEBITSalesSalesAssetsxxAssetsEquity (1) x (2) x (3) x (4) x (5) x Margin x Turnover x Leverage TaxBurdenInterestBurdenDecomposition of ROExTable 19.6 Ratio Decomposition Analysis for Nodett and Somdett Table 19.7 Differences between Profit Margin and Asset Turnover across Industries Table 19.8 Growth Industries Financial Statements, 2004 – 2007 ($ thousands) Table 19.9 Summary of Key Financial Ratios:Leverage, Asset Utilization, Liquidity, Profitability and Market Price Figure 19.1 DuPont Decomposition for Hewlett-PackardTable 19.10 Financial Ratios for Major Industry Groups Economic Value AddedDifference between return on assets (ROA) and the opportunity cost of capital (k)EVA is also called residual incomeEVA can be positive or negative for firms that have positive earningsTable 19.11 Economic Value Added, 2007Table 19.12 Key Financial Ratios of Growth Industries, Inc Table 19.13 Growth Industries Statement of Cash Flows ($ thousands) Accounting DifferencesInventory ValuationDepreciationInflation and Interest ExpenseFair Value AccountingQuality of EarningsInternational Accounting ConventionsComparability ProblemsInternational Accounting DifferencesReserves – many other countries allow more flexibility in use of reservesDepreciation – US allows separate tax and reporting presentationsIntangibles – treatment varies widelyFigure 19.2 Adjusted Versus Reported Price-Earnings RatiosThe Graham TechniqueCareful analysis of a firm’s financial statements could turn up bargain stocksPurchase common stocks at less then their working-capital valueGive no weight to plant or other fixed assetsDeduct all liabilities in full from assets