chap3 FIN课件.docx

chap3 FIN课件.docx

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chap3FIN课件

Chapter3

AnalysisofFinancialStatements

ANSWERSTOEND-OF-CHAPTERQUESTIONS

3-1a.Aliquidityratioisaratiothatshowstherelationshipofafirm’scashandothercurrentassetstoitscurrentliabilities.Thecurrentratioisfoundbydividingcurrentassetsbycurrentliabilities.Itindicatestheextenttowhichcurrentliabilitiesarecoveredbythoseassetsexpectedtobeconvertedtocashinthenearfuture.Thequick,oracidtest,ratioisfoundbytakingcurrentassetslessinventoriesandthendividingbycurrentliabilities.

b.Assetmanagementratiosareasetofratioswhichmeasurehoweffectivelyafirmismanagingitsassets.Theinventoryturnoverratioissalesdividedbyinventories.Dayssalesoutstandingisusedtoappraiseaccountsreceivableandindicatesthelengthoftimethefirmmustwaitaftermakingasalebeforereceivingcash.Itisfoundbydividingreceivablesbyaveragesalesperday.Thefixedassetsturnoverratiomeasureshoweffectivelythefirmusesitsplantandequipment.Itistheratioofsalestonetfixedassets.Totalassetsturnoverratiomeasurestheturnoverofallthefirm’sassets;itiscalculatedbydividingsalesbytotalassets.Theoperatingcapitalrequirementratiomeasurestheamountofcapitalneededtosupportsales.Itiscalculatedbydividingoperatingcapitalbysales.

c.Financialleverageratiosmeasuretheuseofdebtfinancing.Thedebtratioistheratiooftotaldebttototalassets,itmeasuresthepercentageoffundsprovidedbycreditors.Thetimes-interest-earnedratioisdeterminedbydividingearningsbeforeinterestandtaxesbytheinterestcharges.Thisratiomeasurestheextenttowhichoperatingincomecandeclinebeforethefirmisunabletomeetitsannualinterestcosts.Thefixedchargecoverageratioissimilartothetimes-interest-earnedratio,butitrecognizesthatmanyfirmsleaseassetsandalsomustmakesinkingfundpayments.ItisfoundbyaddingEBITandleasepaymentsthendividingthistotalbyinterestcharges,leasepayments,andsinkingfundpaymentsoveroneminusthetaxrate.

d.Profitabilityratiosareagroupofratioswhichshowthecombinedeffectsofliquidity,assetmanagement,anddebtonoperations.Theoperatingprofitmarginaftertaxesmeasurestheamountofoperatingprofitthatisgeneratedbysales.ItisdefinedasNOPATdividedbysales.Theprofitmarginonsales,calculatedbydividingnetincomebysales,givestheprofitperdollarofsales.BasicearningpoweriscalculatedbydividingEBITbytotalassets.Thisratioshowstherawearningpowerofthefirm’sassets,beforetheinfluenceoftaxesandleverage.Returnontotalassetsistheratioofnetincometototalassets.Returnoncommonequityisfoundbydividingnetincomeintocommonequity.

e.Marketvalueratiosrelatethefirm’sstockpricetoitsearningsandbookvaluepershare.Theprice/earningsratioiscalculatedbydividingpricepersharebyearningspershare--thisshowshowmuchinvestorsarewillingtopayperdollarofreportedprofits.Market-to-bookratioissimplythemarketpricepersharedividedbythebookvaluepershare.Bookvaluepershareiscommonequitydividedbythenumberofsharesoutstanding.

f.Trendanalysisisananalysisofafirm’sfinancialratiosovertime.Itisusedtoestimatethelikelihoodofimprovementordeteriorationinitsfinancialsituation.Comparativeratioanalysisiswhenafirmcomparesitsratiostootherleadingcompaniesinthesameindustry.Thistechniqueisalsoknownasbenchmarking.

g.TheDuPontchartisachartdesignedtoshowtherelationshipsamongreturnoninvestment,assetturnover,theprofitmargin,andleverage.TheDuPontequationisaformulawhichshowsthattherateofreturnonassetscanbefoundastheproductoftheprofitmargintimesthetotalassetsturnover.

h.Windowdressingisatechniqueemployedbyfirmstomaketheirfinancialstatementslookbetterthantheyreallyare.Seasonalfactorscandistortratioanalysis.Atcertaintimesoftheyearafirmmayhaveexcessiveinventoriesinpreparationofa“season”ofhighdemand.Thereforeaninventoryturnoverratiotakenatthistimeasopposedtoaftertheseasonwillberadicallydistorted.

3-2Theemphasisofthevarioustypesofanalystsisbynomeansuniformnorshoulditbe.Managementisinterestedinalltypesofratiosfortworeasons.First,theratiospointoutweaknessesthatshouldbestrengthened;second,managementrecognizesthattheotherpartiesareinterestedinalltheratiosandthatfinancialappearancesmustbekeptupifthefirmistoberegardedhighlybycreditorsandequityinvestors.Equityinvestorsareinterestedprimarilyinprofitability,buttheyexaminetheotherratiostogetinformationontheriskinessofequitycommitments.Longtermcreditorsaremoreinterestedinthedebtratio,TIE,andfixed-chargecoverageratios,aswellastheprofitabilityratios.Shorttermcreditorsemphasizeliquidityandlookmostcarefullyattheliquidityratios.

3-3Theinventoryturnoverratioisimportanttoagrocerystorebecauseofthemuchlargerinventoryrequiredandbecausesomeofthatinventoryisperishable.Aninsurancecompanywouldhavenoinventorytospeakofsinceitslineofbusinessissellinginsurancepoliciesorothersimilarfinancialproducts--contractswrittenonpaperandenteredintobetweenthecompanyandtheinsured.Thisquestiondemonstratesthefactthatthestudentshouldnottakearoutineapproachtofinancialanalysisbutrathershouldexaminetheparticularbusinessheorsheisdealingwith.

3-4Giventhatsaleshavenotchanged,adecreaseinthetotalassetsturnovermeansthatthecompany'sassetshaveincreased.Also,thefactthatthefixedassetsturnoverratioremainedconstantimpliesthatthecompanyincreaseditscurrentassets.Sincethecompany'scurrentratioincreased,andyet,itsquickratioisunchangedmeansthatthecompanyhasincreaseditsinventories.

3-5Differencesintheamountsofassetsnecessarytogenerateadollarofsalescauseassetturnoverratiostovaryamongindustries.Forexample,asteelcompanyneedsagreaternumberofdollarsinassetstoproduceadollarinsalesthandoesagrocerystorechain.Also,profitmarginsandturnoverratiosmayvaryduetodifferencesintheamountofexpensesincurredtoproducesales.Forexample,onewouldexpectagrocerystorechaintospendmoreperdollarofsalesthandoesasteelcompany.Often,alargeturnoverwillbeassociatedwithalowprofitmargin,andviceversa.

3-6Inflationwillcauseearningstoincrease,evenifthereisnoincreaseinsalesvolume.Yet,thebookvalueoftheassetsthatproducedthesalesandtheannualdepreciationexpenseremainathistoricvaluesanddonotreflecttheactualcostofreplacingthoseassets.Thus,ratiosthatcomparecurrentflowswithhistoricvaluesbecomedistortedovertime.Forexample,ROAwillincreaseeventhoughthoseassetsaregeneratingthesamesalesvolume.

Whencomparingdifferentcompanies,theageoftheassetswillgreatlyaffecttheratios.Companieswhoseassetswerepurchasedearlierwillreflectlowerassetvaluesthanthosethatpurchasedtheassetslateratinflatedprices.TwofirmswithsimilarphysicalassetsandsalescouldhavesignificantlydifferentROAs.Underinflation,ratioswillalsoreflectdifferencesinthewayfirmstreatinventories.Ascanbeseen,inflationaffectsbothincomestatementandbalancesheetitems.

3-7ROE,usingtheDuPontequation,isthereturnonassetsmultipliedbytheequitymultiplier.Theequitymultiplier,definedastotalassetsdividedbyowners'equity,isameasureofdebtutilization;themoredebtafirmuses,theloweritsequity,andthehighertheequitymultiplier.Thus,usingmoredebtwillincreasetheequitymultiplier,resultinginahigherROE.

3-8a.Cash,receivables,andinventories,aswellascurrentliabilities,varyovertheyearforfirmswithseasonalsalespatterns.Therefore,thoseratiosthatexaminebalancesheetfigureswillvaryunlessaverages（monthlyonesarebest）areused.

b.Commonequityisdeterminedatapointintime,sayDecember31,1998.Profitsareearnedovertime,sayduring1998.Ifafirmisgrowingrapidly,yearendequitywillbemuchlargerthanbeginning-ofyearequity,sothecalculatedrateofreturnonequitywillbedifferentdependingonwhetherendof-year,beginning-of-year,oraveragecommonequityisusedasthedenominator.Averagecommonequityisconceptuallythebestfiguretouse.Inpublicutilityratecases,peoplearereportedtohavedeliberatelyusedendofyearorbeginningofyearequitytomakereturnsonequityappearexcessiveorinadequate.Similarproblemscanarisewhenafirmisbeingevaluated.

3-9Firmswithinthesameindustrymayemploydifferentaccountingtechniqueswhichmakeitdifficulttocomparefinancialratios.Morefundamentally,comparisonsmaybemisleadingiffirmsinthesameindustrydifferintheirotherinvestments.Forexample,comparingPepsicoandCoca-Colamaybemisleadingbecauseapartfromtheirsoftdrinkbusiness,PepsialsoownsotherbusinessessuchasFrito-Lay,PizzaHut,TacoBell,andKFC.

3-10TotalEffect

CurrentCurrentonNet

AssetsRatioIncome

a.Cashisacquiredthroughissuanceof

additionalcommonstock.++0

b.Merchandiseissoldforcash.+++

c.Federalincometaxduefortheprevious

yearispaid.─+0

d.Afixedassetissoldforlessthan

bookvalue.++─

e.Afixedassetissoldformorethan

bookvalue.+++

f.Merchandiseissoldoncredit.+++

g.Paymentismadetotradecreditorsfor

previouspurchases.─+0

h.Acashdividendisdeclaredandpaid.──0

i.Cashisobtainedthroughshort-termbank

loans.+─0

j.Sho