(2023)财务分析报告英文版课件(一)

第1篇Executive SummaryThis financial analysis report provides a comprehensive overview of [Company Name]'s financial performance over the past [time frame], including an analysis of its financial statements, profitability, liquidity, solvency, and investment activities. The report aims to assess the company's financial health, identify strengths and weaknesses, and provide recommendations for future improvement.1. Introduction1.1 Background of the Company- Brief history- Industry overview- Key products/services1.2 Objectives of the Report- To evaluate the financial performance of [Company Name]- To identify financial strengths and weaknesses- To provide recommendations for improvement2. Financial Statements Analysis2.1 Income Statement Analysis2.1.1 Revenue Analysis- Revenue trends over the past [time frame]- Revenue growth rate- Revenue sources2.1.2 Cost of Goods Sold (COGS)- COGS trends over the past [time frame]- COGS as a percentage of revenue- Comparison with industry benchmarks2.1.3 Gross Profit Margin- Gross profit margin trends over the past [time frame]- Comparison with industry benchmarks2.1.4 Operating Expenses- Trends in operating expenses over the past [time frame]- Analysis of major expense categories (e.g., selling, general, and administrative expenses)- Comparison with industry benchmarks2.1.5 Net Profit Margin- Net profit margin trends over the past [time frame]- Comparison with industry benchmarks2.2 Balance Sheet Analysis2.2.1 Assets- Analysis of current assets (e.g., cash, accounts receivable, inventory)- Analysis of fixed assets (e.g., property, plant, and equipment)- Comparison with industry benchmarks2.2.2 Liabilities- Analysis of current liabilities (e.g., accounts payable, short-term debt)- Analysis of long-term liabilities (e.g., long-term debt, deferred tax liabilities)- Comparison with industry benchmarks2.2.3 Equity- Analysis of shareholders' equity (e.g., common stock, retained earnings)- Comparison with industry benchmarks2.3 Cash Flow Statement Analysis2.3.1 Operating Cash Flow- Analysis of operating cash flow over the past [time frame]- Comparison with net income- Impact of operating activities on cash flow2.3.2 Investing Cash Flow- Analysis of investing cash flow over the past [time frame]- Comparison with capital expenditures- Impact of investing activities on cash flow2.3.3 Financing Cash Flow- Analysis of financing cash flow over the past [time frame]- Comparison with debt and equity financing activities- Impact of financing activities on cash flow3. Financial Ratios Analysis3.1 Liquidity Ratios3.1.1 Current Ratio- Current ratio trends over the past [time frame]- Comparison with industry benchmarks3.1.2 Quick Ratio- Quick ratio trends over the past [time frame]3.1.3 Cash Ratio- Cash ratio trends over the past [time frame]- Comparison with industry benchmarks3.2 Solvency Ratios3.2.1 Debt-to-Equity Ratio- Debt-to-equity ratio trends over the past [time frame]- Comparison with industry benchmarks3.2.2 Interest Coverage Ratio- Interest coverage ratio trends over the past [time frame]- Comparison with industry benchmarks3.2.3 Times Interest Earned Ratio- Times interest earned ratio trends over the past [time frame] - Comparison with industry benchmarks3.3 Profitability Ratios3.3.1 Gross Profit Margin- Gross profit margin trends over the past [time frame]- Comparison with industry benchmarks3.3.2 Net Profit Margin- Net profit margin trends over the past [time frame]- Comparison with industry benchmarks3.3.3 Return on Assets (ROA)- ROA trends over the past [time frame]3.3.4 Return on Equity (ROE)- ROE trends over the past [time frame]- Comparison with industry benchmarks3.4 Efficiency Ratios3.4.1 Inventory Turnover Ratio- Inventory turnover ratio trends over the past [time frame]- Comparison with industry benchmarks3.4.2 Accounts Receivable Turnover Ratio- Accounts receivable turnover ratio trends over the past [time frame]- Comparison with industry benchmarks3.4.3 Total Asset Turnover Ratio- Total asset turnover ratio trends over the past [time frame]- Comparison with industry benchmarks4. Key Findings and Analysis4.1 Strengths- Highlight key financial strengths identified during the analysis4.2 Weaknesses- Identify key financial weaknesses identified during the analysis4.3 Opportunities- Discuss potential opportunities for growth and improvement based on the analysis4.4 Threats- Identify potential threats to the company's financial performance based on the analysis5. Recommendations5.1 Improvement Strategies- Provide specific recommendations for improving the company's financial performance, based on the analysis5.2 Risk Mitigation- Discuss strategies for mitigating potential risks identified during the analysis5.3 Monitoring and Reporting- Suggest methods for monitoring the company's financial performance and reporting on progress6. ConclusionThis financial analysis report provides a detailed assessment of [Company Name]'s financial health and performance. By identifying strengths, weaknesses, opportunities, and threats, the report aims to provide valuable insights for decision-makers and stakeholders. Implementing the recommended strategies and monitoring the company's financial performance will be crucial in ensuring long-term success.7. Appendices7.1 Financial Statements- Include the complete set of financial statements (income statement, balance sheet, cash flow statement)7.2 Additional Data and Calculations- Provide any additional data and calculations used in the analysis7.3 References- List all sources of data and information used in the reportNote: This framework is intended to serve as a guide for creating a comprehensive financial analysis report. The actual content and depth of the report will vary based on the specific company and industry being analyzed.第2篇Executive SummaryThe executive summary provides a concise overview of the key findings of the financial analysis report. It should include the following elements:1. Purpose of the Report: Briefly state the objective of the financial analysis, such as assessing the financial health of a company, evaluating investment opportunities, or analyzing industry trends.2. Key Findings: Highlight the most significant findings from the analysis, including financial performance, profitability, liquidity, solvency, and efficiency ratios.3. Recommendations: Summarize the recommendations based on the analysis, such as investment decisions, strategic actions, or operational improvements.4. Scope of the Analysis: Mention the time period covered by the analysis and any specific financial metrics or data sources used.---1. IntroductionThis section sets the stage for the report by providing background information and context.1. Background: Describe the company or industry being analyzed,including its history, products/services, and market position.2. Objectives: Clearly define the objectives of the financial analysis, including what aspects of the company's financial performance will be evaluated.3. Methodology: Outline the methods and tools used to conduct the financial analysis, such as ratio analysis, trend analysis, and benchmarking.---2. Financial Performance AnalysisThis section delves into the financial performance of the company, focusing on key metrics and trends.1. Revenue Analysis:- Revenue trends over time- Revenue by product/service line- Revenue growth rate2. Profitability Analysis:- Net income trends- Gross margin analysis- Operating margin analysis- Net margin analysis3. Liquidity Analysis:- Current ratio- Quick ratio- Days of cash on hand- Receivables turnover ratio4. Solvency Analysis:- Debt-to-equity ratio- Interest coverage ratio- Debt service coverage ratio5. Efficiency Analysis:- Inventory turnover ratio- Accounts receivable turnover ratio- Asset turnover ratio---3. Trend AnalysisThis section examines the trends in the company's financial performance over time.1. Revenue Trends: Analyze the growth or decline in revenue over thepast few years, and identify any significant changes or outliers.2. Profitability Trends: Assess the changes in net income, gross margin, operating margin, and net margin over the past few years.3. Liquidity and Solvency Trends: Analyze the changes in liquidity ratios, solvency ratios, and interest coverage ratios over the past few years.4. Efficiency Trends: Evaluate the changes in inventory turnover, accounts receivable turnover, and asset turnover ratios over the pastfew years.---4. Comparison with PeersThis section compares the company's financial performance with that ofits peers or industry benchmarks.1. Financial Ratios: Compare key financial ratios, such as profitability, liquidity, solvency, and efficiency ratios, with industry averages or peer companies.2. Market Share: Analyze the company's market share and its position relative to its competitors.3. Strategic Positioning: Assess the company's strategic positioning in the market, including its competitive advantages and disadvantages.---5. SWOT AnalysisThis section identifies the company's strengths, weaknesses, opportunities, and threats.1. Strengths: List the company's strengths, such as strong brand recognition, innovative products, or efficient operations.2. Weaknesses: Identify the company's weaknesses, such as high debt levels, poor inventory management, or limited market presence.3. Opportunities: Analyze the opportunities available to the company, such as new market segments, technological advancements, or regulatory changes.4. Threats: Identify the threats that could impact the company'sfinancial performance, such as increased competition, economic downturns, or changes in consumer preferences.---6. Conclusion and RecommendationsThis section summarizes the key findings of the financial analysis and provides recommendations for the company or investors.1. Summary of Findings: Recap the main findings from the analysis, including financial performance, trends, and comparisons with peers.2. Recommendations:- Strategic recommendations for the company, such as entering new markets, improving operational efficiency, or reducing debt levels.- Investment recommendations for investors, such as buy, hold, orsell recommendations based on the company's financial performance and future prospects.3. Limitations: Acknowledge any limitations or assumptions made during the financial analysis.---AppendicesThis section includes any additional information or data that supports the findings of the report.1. Financial Statements: Include the company's income statement, balance sheet, and cash flow statement for the relevant time period.2. Detailed Ratios: Provide a more comprehensive breakdown of the financial ratios used in the analysis.3. Industry Data: Include relevant industry data and benchmarks used for comparison.---By following this framework, you can create a comprehensive and informative financial analysis report that provides valuable insights into the company's financial health and future prospects.第3篇Executive SummaryThe executive summary provides a concise overview of the financial analysis report. It should include the following key points:- Purpose of the Report: Briefly state the purpose of the financial analysis and the specific aspects of the company's financial performance being evaluated.- Company Overview: Provide a brief description of the company,including its industry, size, and key products/services.- Key Findings: Highlight the most significant findings from the analysis, such as financial strengths, weaknesses, and areas of concern.- Recommendations: Offer a summary of the recommendations for improving the company's financial performance or addressing specific issues.Table of Contents- Executive Summary- Company Overview- Financial Analysis- Revenue Analysis- Profitability Analysis- Liquidity Analysis- Solvency Analysis- Capital Structure Analysis- Investment Analysis- Cash Flow Analysis- Comparison with Peers- SWOT Analysis- Recommendations- Appendix1. Company OverviewThis section provides a detailed background of the company, including:- History: A brief history of the company, including its founding, major milestones, and any recent developments.- Industry: An overview of the industry in which the company operates, including key trends and challenges.- Business Model: A description of the company's business model, including its revenue streams and value proposition.- Organizational Structure: Information on the company's organizational structure, including key management personnel.- Location and Operations: Details about the company's physicallocations and operational facilities.2. Financial AnalysisThis section delves into the financial performance of the company, using various ratios and metrics:2.1 Revenue Analysis- Revenue Trends: Analyze the company's revenue over the past several years, looking for trends and patterns.- Revenue Drivers: Identify the key factors that contribute to the company's revenue growth or decline.- Revenue Mix: Examine the composition of the company's revenue, including product lines, services, and geographic regions.2.2 Profitability Analysis- Net Profit Margin: Calculate and analyze the net profit margin to determine the company's profitability.- Operating Margin: Assess the company's operating margin to understand its operational efficiency.- Gross Margin: Analyze the gross margin to evaluate the company's pricing strategy and cost control.- Earnings Per Share (EPS): Calculate and discuss the company's EPS to gauge its profitability on a per-share basis.2.3 Liquidity Analysis- Current Ratio: Calculate and discuss the current ratio to assess the company's short-term liquidity.- Quick Ratio: Analyze the quick ratio to evaluate the company's ability to meet its short-term obligations without relying on inventory.- Cash Conversion Cycle: Calculate the cash conversion cycle to understand the time it takes for the company to convert its investments in inventory and accounts receivable into cash.2.4 Solvency Analysis- Debt-to-Equity Ratio: Calculate and discuss the debt-to-equity ratio to assess the company's long-term financial stability.- Interest Coverage Ratio: Analyze the interest coverage ratio to determine the company's ability to cover its interest expenses.- Times Interest Earned: Calculate the times interest earned ratio to evaluate the company's ability to meet its debt obligations.2.5 Capital Structure Analysis- Debt-to-Total Capital Ratio: Analyze the debt-to-total capital ratio to assess the company's capital structure.- Equity Ratio: Calculate the equity ratio to understand the proportion of the company's assets financed by equity.- Capital Expenditures: Discuss the company's capital expenditures and their impact on its financial health.2.6 Investment Analysis- Return on Assets (ROA): Calculate and discuss the ROA to evaluate the company's efficiency in using its assets to generate profit.- Return on Equity (ROE): Analyze the ROE to determine the return on the shareholders' investment.- Dividend Yield: Calculate the dividend yield to assess the company's dividend policy and potential returns for investors.2.7 Cash Flow Analysis- Operating Cash Flow: Analyze the company's operating cash flow to understand its cash-generating ability.- Investing Cash Flow: Evaluate the company's investing cash flow to assess its capital expenditure and investment activities.- Financing Cash Flow: Discuss the company's financing cash flow to understand its financing activities, such as debt issuance and dividends paid.3. Comparison with PeersThis section compares the company's financial performance with its peers in the industry, using relevant ratios and metrics. The comparison should include:- Market Capitalization: Compare the company's market capitalization with its peers.- Revenue Growth: Analyze the revenue growth rates of the company andits peers.- Profitability Ratios: Compare profitability ratios, such as net profit margin and return on equity.- Liquidity and Solvency Ratios: Assess liquidity and solvency ratios to evaluate the financial health of the company relative to its peers.4. SWOT AnalysisThis section provides a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) of the company, considering both internal and external factors.5. RecommendationsBased on the findings from the financial analysis and SWOT analysis,this section offers recommendations for improving the company'sfinancial performance or addressing specific issues. Recommendations may include:- Strategic Initiatives: Suggest strategic initiatives to enhance the company's competitive position and market share.- Operational Improvements: Recommend operational improvements to increase efficiency and reduce costs.- Financial Management: Propose financial management strategies to improve liquidity, solvency, and profitability.- Investment Opportunities: Identify potential investment opportunities that could enhance the company's financial performance.6. AppendixThe appendix contains any additional information or data that support the findings and recommendations of the report. This may include:- Detailed financial statements and footnotes- Charts and graphs illustrating financial trends- Additional ratios and metrics used in the analysis- Research methodology and data sourcesThis framework provides a comprehensive structure for a financial analysis report, ensuring that all key aspects of the company's financial performance are thoroughly examined and presented.。

第1篇Date: March 31, 2023Executive Summary:This report provides a detailed financial analysis of XYZ Corporationfor the fiscal year ending December 31, 2022. The analysis covers key financial metrics, profitability, liquidity, solvency, and efficiency. The report aims to provide stakeholders with insights into the company's financial health and performance, and to identify areas of strength and potential improvement.1. IntroductionXYZ Corporation is a leading manufacturer of consumer electronics, operating in a highly competitive market. The company has seen significant growth over the past few years, driven by strong product innovation and an effective marketing strategy. This report analyzes the financial performance of the company to understand its financialposition and future prospects.2. Financial Overview2.1 Revenue and ProfitabilityRevenue:- Total Revenue for the fiscal year 2022 was $1,250 million, representing a 10% increase from the previous year.- The revenue growth was primarily driven by a 12% increase in sales volume and a 5% increase in average selling price.Profitability:- Net Income for the fiscal year 2022 was $100 million, a 15% increase from the previous year.- The increase in net income was due to higher revenue, effective cost management, and an improved gross margin.2.2 Balance SheetAssets:- Total Assets as of December 31, 2022, were $1,500 million, an increase of 8% from the previous year.- The increase in assets was primarily due to an increase in inventory and property, plant, and equipment.Liquidity:- Current Ratio as of December 31, 2022, was 1.5, indicating good short-term liquidity.- Quick Ratio was 1.2, indicating that the company can cover its current liabilities with its most liquid assets.2.3 Cash FlowOperating Cash Flow:- Operating Cash Flow for the fiscal year 2022 was $150 million, a 20% increase from the previous year.- The increase in operating cash flow was due to higher net income and effective management of working capital.Investing Cash Flow:- Investing Cash Flow for the fiscal year 2022 was $50 million,主要用于资本支出和收购。

(2023)财务报告说课课件(一)(2023)财务报告说课课件概述本篇文章将介绍2023年度公司的财务报告，并且分析报告中的重点内容。

公司简介本公司是一家新兴的高科技企业，成立于2018年。

我们的重点业务领域是人工智能、物联网和云计算等领域。

财务总览在2023年度，本公司的财务状况持续良好。

我们的总营收达到了1.2亿美元，比去年增长了50%。

净亏损降低到了300万美元，大幅改善了去年的负面情况。

营收分析我们公司主要的收入来源是软件销售和技术服务。

根据财报数据显示，我们的软件销售总额达到了7000万美元，而技术服务总额则达到了5000万美元。

此外，我们的增值服务也没有被忽视，增值服务的收入也增加了很多，达到了1000万美元。

成本分析营收增长的同时，我们的成本也得到了合理的控制。

我们的销售成本仅占总营收的20%，管理费用和研发费用分别占到了20%和30%。

这种合理的分配方式确保了企业的长期可持续发展。

利润分析去年我们曾经遭受到了巨大的亏损，但是在经过一年的艰苦努力后，我们在2023年度实现了持续盈利。

我们的净利润达到了2000万美元，而毛利率也提高到了60%。

展望未来公司在2023年实现了大的转变，迈出了稳健的发展步伐。

在未来，我们的目标是打造更加可持续的生态系统，不断提升我们的技术水平，并且打造更好的服务。

我们相信，未来的道路仍然坎坷，但是我们会在途中不断前行，谋求进步。

结论2023年度公司的财务报告证明，公司的长期战略还是很成功的。

我们的团队在实现大的成果的同时，也着眼于未来，探索出复合式的增长模式。

在未来，我们会更加积极地追求我们的梦想，并且始终保持艰苦奋斗的精神。

风险分析在财务报告中，我们还要对未来可能出现的风险进行分析与预警。

主要的风险包括市场风险、技术风险、政策风险等。

市场风险我们的主营业务涉及人工智能、物联网和云计算等领域，市场变化十分频繁，竞争非常激烈。

我公司还需要在创新上不断提升竞争力，不断突破技术和产品瓶颈，才能在市场中立于不败之地。

(2023)某集团近三年财务报表分析报告课件(一)2023某集团近三年财务报表分析报告简介本报告旨在对某集团近三年的财务报表进行分析，以便更好地理解集团的财务状况和业务运营状况。

一、三年财务数据概览•2019年：净利润为10亿元，总资产为100亿元，总负债为60亿元，股东权益为40亿元；•2020年：净利润为8亿元，总资产为90亿元，总负债为50亿元，股东权益为40亿元；•2021年：净利润为12亿元，总资产为110亿元，总负债为60亿元，股东权益为50亿元。

二、财务比率分析1. 偿债能力比率•流动比率（2021年）= 总流动资产 / 总流动负债 = 1.67，相对较高；•速动比率（2021年）= (总流动资产 - 存货) / 总流动负债 =1.25，较高。

2. 营运能力比率•应收账款周转率（2021年）= 营业收入 / 平均应收账款余额 =9.6次/年，较优秀；•存货周转率（2021年）= 营业成本 / 平均存货余额 = 6.2次/年，算是处于平均水平。

3. 盈利能力比率•毛利率（2021年）= (营业收入 - 营业成本) / 营业收入 = 24%，相对偏低；•净利率（2021年）= 净利润 / 营业收入 = 10.2%，相对较高。

4. 成长能力比率•总资产报酬率（2021年）= 净利润 / 总资产 = 10.9%，相对稳定。

三、财务分析结论1.三年中，该集团的净利润波动较大，成长能力和盈利水平相对稳定；2.该集团的偿债能力和营运能力相对良好，但盈利能力的提升空间较大；3.应该加强对存货管理，提升毛利率。

四、未来展望未来，该集团应以提高盈利能力为目标，加强存货与资金的管理，并稳步提升净利率及总资产报酬率，以实现财务持续稳健发展。

五、风险提示1.该集团所在行业存在市场竞争激烈、原材料价格波动等风险因素；2.经济形势不确定性较大，可能对该集团带来一定的影响。

六、参考文献1.《财务报表分析》，林宁著，中国财政经济出版社，2018年；2.《会计学原理》，朱智慧著，中国税务出版社，2019年。

美的2023年财务报告英文版As of December 31, 2023, we are pleased to present the financial report for the year. Despite the challenges posed by the global economic landscape, we are proud to report a strong performance in 2023.Revenue for the year reached $10.5 billion, representing a 8% increase from the previous year. This growth can be attributed to our continued focus on innovation and customer satisfaction. Our investment in new product development and marketing initiatives has paid off, as we have seen increased demand for our products across all regions.Operating income for the year was $2.1 billion, a 10% increase from the previous year. This increase is a result of our efforts to streamline operations and improve efficiency across the organization. We have also been successful in managing our costs, which has contributed to the overall improvement in operating income.Net income for the year was $1.5 billion, a 12% increase from the previous year. This growth is a testament to our commitment to delivering value to our shareholders. We have focused on maximizing profitability while also investing in the future growth of the company.In terms of our balance sheet, we have maintained a strong financial position. Our total assets stand at $25 billion, with a healthy mix of cash, investments, and property. Our liabilities are well-managed, with a manageable level of debt and adequate provisions for future obligations.Looking ahead, we remain cautiously optimistic about the future. While the global economic environment remains uncertain, we are confident in our ability to navigate any challenges that may arise. We will continue to focus on innovation, customer satisfaction, and operational excellence to drive future growth and success.In conclusion, we are pleased with the strong performance in 2023. Our focus on delivering value to our customers and shareholders has paid off, and we are well-positioned for continued success in the future. We would like to express our gratitude to our employees, customers, and shareholders for their continued support, and we look forward to the opportunities and challenges that lie ahead.。

财务报表分析英文课件 (一)Financial statement analysis is an essential tool for identifying the financial health of an organization, developing and evaluating strategies, and making investment decisions. The use of financial statements enables managers, investors, and other stakeholders to determine the financial performance, financial position, and cash flow of an organization. In this article, we will provide a comprehensive guide to financial statement analysis using an English PowerPoint presentation.1. Introduction to Financial Statement Analysis: The first slide or section should cover the essential concepts in financial statement analysis, such as what financial statements are, their purposes, and the tools and techniques used to analyze them. This section should also introduce the three primary financial statements; the income statement, the balance sheet, and the cash flow statement, and their respective formats.2. Analyzing the Income Statement: This section should cover the income statement's key elements, such as revenue, cost of goods sold, gross profit, operating expenses, and net income. The slide should highlight the different financial ratiosthat can be computed from these elements, such as the profit margin, gross margin, and EBITDA. The presentation should also include performance metrics like return on investment (ROI) or return on equity (ROE).3. Analyzing the Balance Sheet: This slide should introducethe balance sheet's structure and the key elements that makeup the balance sheet, such as assets, liabilities, and equity. This section should highlight the financial ratios that canbe computed from the balance sheet such as debt-to-equity ratio, current ratio, and quick ratio. This slide should also cover important financial metrics such as days sales outstanding, inventory turnover, and accounts payable turnover.4. Analyzing the Cash Flow Statement: This section shouldcover the cash flow statement's structure and the keyelements that make up the cash flow statement, such as operating cash flow, investing cash flow, and financing cash flow. The slide should highlight the financial ratios thatcan be computed from the cash flow statement, such as thecash conversion cycle and cash ratio. This slide should also cover important financial metrics such as free cash flow and capital expenditures.5. Interpreting Financial Statement Analysis Results: This section should cover how to interpret the findings in the analysis. The slide must cover how to interpret financialratios and how they relate to the organization's financial performance, including limitations and assumptions. This section should also cover how to use financial statement analysis to compare different organizations' financial performance and identify key trends.6. Conclusion: The presentation should conclude bysummarizing the key points and discussing the importance of financial statement analysis for investors, managers, and other decision-makers.In conclusion, financial statement analysis is an essential tool for evaluating an organization's financial status, helping to make decisions, and formulate strategies. The use of financial ratios and metrics enable decision-makers to analyze the financial performance, position, and cash flow of an organization. Whether you are an investor, executive, or decision-maker, financial statement analysis can provide insight into the organization's operations and guide your future decisions.。

Financial Statement AnalysisTo develop techniques for evaluating firms using financial statement analysis for equity and credit analysis.Integrates financial statement analysis with corporate finance, accounting and fundamental analysis.Adopts activist point of view to investing: the market may be inefficient and the statements may not tell all the truth.What Will You Learn From the Course• How statements are generated• The role of financial statements in determining firms’ values• How to pull ap art the financial statements to get at the relevant information• How ratio analysis aids in valuation• The relevance of cash flow and accrual accounting information • How to calculate what the P/E ratio should be ?• How to calculate what the price-to-book ratio ?Need for financial statement analysisGAAP – plexEconomic events about the firm to be reported to the public Relevance vs ReliabilityReporting: Recognition vs Disclosure (where)Users of Firms’ Financial InformationEquity InvestorsInvestment analysisLong term earnings powerManagement performance evaluationAbility to pay dividendRisk – especially marketDebt InvestorsShort term liquidityProbability of defaultLong term asset protectionCovenant violationsUsers of Firms’ Financial InformationManagement: Strategic planning; Investment in operations;Performance EvaluationLitigants - Disputes over value in the firmCustomers - Security of supplyGovernments: Policy making and Regulation– Taxation– Government contractingEmployees: Security and remunerationInvestors and management are the primary users of financial statementsFundamental AnalysisStep 1 - Knowing the Business•The Products; The Knowledge Base•The petition’ The Regulatory ConstraintsStep 2 - Analyzing Information•In Financial Statements•Outside of Financial StatementsStep 3 - Forecasting Payoffs•Measuring Value Added•Forecasting Value AddedStep 4 - Convert Forecasts to a ValuationStep 5 - Trading on the Valuation•Outside Investor: pare Value with Price to; BUY, SELL, or HOLD•Inside Investor: pare Value with Cost to; ACCEPT or REJECT StrategyA valuation model guides the process: Forecasting is at the heart of the process and a valuation model specifies what is to be forecasted (Step 3) and how a forecast is converted to a valuation (Step 4). What is to be forecasted (Step 3) dictates the information is implied?Balance Sheet•Assets (SFAC6): “probable future economic benefits obtained or controlled by a particular entity as a resultof past transaction or events-- no reference to risk (eg, assets sold but in which entityretains a risk)•Liabilities (SFAC6): ‘probable future sacrifice of economic benefits arising from present obligations of a particularentity to transfer assets or provide services to other entities in the future as a result of past transactions or events”-- not always followed (eg, certain leases and, until recently, pension benefits)•Equity (SFAC6): the residual interest in the net assets of an entity that remains after deducting i ts liabilities”-- does not handle situations where a source of capitalhas elements of debt & equity (eg, convertibles)•Classified by liquidityCA : converted to cash or used within 1-year oroperating cycle (if longer)CL: obligations expected to be settled within 1-year oroperating cycle•Tangible A&L reported above intangibles (goodwill, contingent liabilities)Measurement of Assets & Liabilities•Historical Cost, for most ponents of Balance Sheet•May be at market under “lower of cost or market rule”•Reversals of prior write downs allowed for marketable equity securities but not for inventories•Financial service firms (banks, brokerage, insurance) report certain A&L at market•A&L of foreign affiliates reported at end-of-period X-rate or a bination of it and specified historical X-rates •Intangible assets have uncertain and hard to measure benefits and are reported only when acquired via a“purchase method” acquisition-- brand names-- when reported, called Goodwill, Patents, etc.Two Fundamental shortings of the Balance Sheet Elusiveness of valueValue cannot be assigned to all assetsOther Balance Sheet issues: Book Value vs. Market ValueInflation: The correct way to think about inflation is that inflation represents a decline in the value of one good – the currency of denomination (i.e., the U.S. dollar in our case). When the value of the currency declines, prices of all other goods & services rise because those prices are measured in terms of dollarsWeakness of Historical Cost Accounting: it ignores the impact of changes in the purchasing power of the currency. The net impact of not considering inflation is that book value understates the market value.Obsolescence causes book value to overstate market valueHow to Measure Effect of Obsolescencea. Observe difference between market value & book value (after adjustingfor inflation)b. Estimate the value of the asset’s earning power. But this is simply thediscounted cash flow approach & thus it represents circular reasoning.Inflation & ObsolescenceInflation causes book value to understate market valueObsolescence causes book value to overstate market valueThe effect of inflation & obsolescence may not be apparent in an examination of book values because they offset one anotherOrganizational Capitala. The whole is worth more than the sum of the partsb. Returns to Entrepreneurshipc. Difficult to separate from the firm as a going concernd. Can be estimated only by examining the earning power of the panySources of Organizational Capital Valuesa. Long-term relationshipsb. Reputational “brand name” capitalc. Growth optionsd. Network of suppliers and distributorsMore on Organizational Capitala. It is difficult to separate the firm’s organizational capital from the firm as anongoing concernb. The value of a brand name is not reflected in the replacement cost of assetsc. Can only be estimated by examining the earning power of the pany (DCF)Adjustments to Book ValueEstimate Replacement CostEstimate Liquidation ValueDrawbacksDo adjusted book values reflect market values?Adjusted book values do not consider organizational capital Drawbacks of AdjustmentsIt is often difficult to determine if we have made the correct adjustments Adjustments often fail to consider the value of off-balance sheet itemsReplacement CostNo universal agreementCan use price indexCPI, PPI, GDP implicit deflatorIgnores organizational capitalLiquidation ValueSecondary markets do not existAsset specificityContestable marketsIne statementNet SalesCost of Goods SoldGross ProfitSelling & Administrative expensesAdvertisingLease paymentsDepreciation and amortizationRepairs and maintenanceOperating ProfitOther ine (expense)Interest ineInterest expenseEarnings before Ine taxesIne taxesNet earningsStatement of Consolidated Retained Earnings Retained earnings at beginning of yearNet earningsCash DividendsRetained earnings at end of yearIne Statement•Based on Accrual accounting•Based on Matching Principle•Revenues(SFAC6) “inflows of an entity from delivering or producing goods, rendering services, or carrying out otheractivities that constitute the entities ongoing major or centraloperations”•Expenses(SFAC6) “outflows from delivering or producing goods, rendering services, or carrying out other activities thatconstitute the entities ongoing major or central operations”•PREHENSIVE INE CONCEPT“the change in equity from transactions from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners”•Gains“Increases in equity from peripheral or incidental transactions of an entity except those that result from revenues or investment by owners.”•Losses“Decreases in equity from p eripheral or incidental transactions of an entity except those that result from revenues or investment by owners.”Revenues+ Other ine and revenues- E xpenses= Ine from CONTINUING OPERATIONS∀Unusual or infrequent events= Pre tax earnings from continuing operations- I ne tax expense= After tax earnings from continuing operations*∀Discontinued operations (net of tax)*∀Extraordinary operations (net of tax)*∀Cumulative effect of accounting changes (net of tax) * = Net Ine ** Per share amounts are reported for each of these items High quality ine statement reflect repeatable ine statement Gain from non-recurring items should be ignoredwhen examining earningsHigh quality earnings result from the use of conservative accounting principles that do not overstate revenues or understate costsLow Quality of Earnings Indicators1.Unstable Ine Statement Elements unrelated to normalbusiness operations2 Earnings that reflect dubious adjustments to estimatedliability accounts3 Earnings that have been determined using liberal accountingpolicies (methods and estimates) because of the resultingoverstatement of net ine. Such overstatement also results in the overstatement of future earnings projections ine based on ultraconservative accounting policiessince the resulting net ine is misleading as a basis forpredicting future earningsWhat to do?pare the pany’s accounting polices to the prevalentaccounting policies in the industry5.Unreliable and inaccurate accounting estimatesWhat to watch for?Prior estimates materially differ from actualexperience, such as where the pany’s assumed interest rate onpension fund assets significantly differs from the actual interestrate earned as reflected by significant actuarial gains and losses.What to do?Restate net ine as if realistic accounting estimates were used.6. Earnings that have been artificially smoothed or managed.What to watch for?a. Revenue reflected earlier or later than the realistic time periodb. Shifting of expense among reporting periodsc. Smoothly rising earnings trendd. Sharp increase or decrease in sales in the last quarter of the yearsas reflected in the 4th quarter ine statemente. Trading of investment securities among affiliated paniesf. Significant modification in estimated liability accounts in the lastquarterg. Writing down a good asset (inventory) and selling it next year toshow higher earningsh. The “big bath”, in which everything is written off in a really badyear so that it will be easier to show good profits in the followingyears. This sometimes occurs when new management takes overand wishes to blame old management for poor profits or whenearnings are already so low that their further reduction my nothave significant impactWhat to do?Look at the functional relationship of sales and net ine over time. An inconsistent relationship may be a manipulatorindicator. Restate earnings by taking out profit increments orreductions due to ine management ploys7.Deferral of costs that do not have future economic benefitWhat to watch fora. Inventory of unsalable items in view of current environment (8track tapes, typewriters, large automobiles during oil shortage)b. Sudden write-offs of inventoryc. Goodwill on the balance sheet but the pany has none (operating atlosses, significant decline in market share, bad publicity)d. Costs that are currently capitalized when in prior years, they wereexpensed (e.g. Tooling costs in inventory)What to doRestate net ine as if the unrealistic deferral had not been made.8. Unjustified Changes in Accounting Principles and EstimatesWhat to watch fora. A firm has a past history of making frequent accounting changesb. Accounting changes that create earnings growthc. The pany fires the auditor and hires another one because of adisagreement over a proposed accounting change.What to doa. Determine whether the accounting change is justified by seeing if itconfirms to requirements in FASB statements, Industry Audit Guides& IRS regulationsb. Ascertain whether the accounting change is preferable, given nature ofbusiness (e.g., decreasing the life of a puter because of newtechnological advances in the industry)c. Does change make sense? (Lowering bad debt expense as % ofaccounts receivable does NOT make sense when customer defaultsare rising)d. If accounting change results in increasing net ine, restate earnings asthey would have been if the old method had been retained.9.Premature or Belated Revenue RecognitionWhat to watch fora. Accruing unbilled salesb. Is there a sufficient provision for future losses in connection withthe recognition of revenue?c. Improper deferral of revenue to a later periodd. Reversal of previously recorded profitsWhat to do- Restate revenue as if proper revenue recognition were made10.Underaccrual or Overaccrual of ExpensesWhat to watch fora. Failure to incur necessary maintenance expendituresb. Inadequate warranty provisionWhat to do- Adjust net ine for difference between expenseprovided & normal expense11.Improper Accounting PoliciesWhat to watch fora. Reduction of expense for overly anticipated recoveries of excesscosts due to modifications in government contractsb. Substantial provision for future costs in present year (e.g.warranties) because firm was remiss in making sufficientprovisions in prior yearsWhat to do-restate earning of years affected so can determineproper earnings trend12.Modification in Loan Agreements Due to FinanciallyWeak BorrowersWhat to watch for - lowering of interest on loanWhat to do - downwardly adjust net ine for inclusion of accrued interest ine on risky loans13.Change in corporate policy for the current year, whichimpacts earnings (e.g., writing insurance renewal contracts in the 4th quarter of the current year rather than the 1stquarter of the next year).14.Unjustified Cutback in Discretionary CostsWhat to watch fora. Declining tend in discretionary costs as a % of net sales or toassets to which they applyb. Vacillation in the ratio of discretionary costs to sales over theyears as this may indicate management of earningsWhat to doa. Determine trend in discretionary costs over time throughuse of index numbersb. Determine ratio of discretionary costs to sales over last 5years. An example is ratio of repairs & maintenance tosales and/or to fixed assets15.Book Ine Substantially Exceeds Taxable IneWhat to watch for - A continual, significant rise in deferred ine tax credit account due to liberal accounting policies16.Residual Ine that is Substantially less than Net IneResidual Ine may be determined by deducting the imputed costof capital (weighted average cost of capital time total assets)from net ine.What to do - Determine ratio over time of residual ine to net ine17. A High Degree of Uncertainty Associated with IneStatement ponentsWhat to watch fora. Firm engaged in long-term activities requiring many estimates inine measurement processb. Significant future loss provisionsc. Estimates have been consistently materially different from actualexperienceWhat to doa. pare o ver time firm’s estimated liability provisions with actuallosses occurring. – e.g., warranty cost sb. Determine what percent of total assets are intangible, which bytheir nature require material estimates to be made18.Unreliably Reported EarningsWhat to watch fora. Poor system of internal control because it infers possibleerrors in reporting systemb. High turnover rate in auditorsc. pany has reputation for managing earnings and/or usingliberal accounting policiesd. Indications of lack of management integrity as evidenced bysuch things as bribesWhat to doa. Determine trend in audit fees over timeb. Examine for disclosure made by pany related to adjustmentsdue to prior years' accounting errorsc. Look at accounting, financial and brokerage researchpublications that note and give examples of panies withquestionable accounting policies.High Quality of Earnings Indicators: Ine Backed up by Cash Ine not involving the Inclusion of amortization costsrelated to questionable assets, such as deferred charges Ine that reflects Economic Reality4.Ine Statements ponents that are Recognized Close to thePoint of Cash Inflow and Cash OutflowPolicies that lower quality of earnings1. reduce expense for expected recovery of excess costs resultingfrom changes in government contract – only collected 65%2. unrealistic decline in percentage of sales allowance to sales3. provision for future costs (warranties) high becauseunderprovided in past4. “Big Bath”5. re-negotiate terms of loan with weak borrower6. transfer from 1 sub to another7. sell securities at a gain and buy them back at higher price- haveto recognize lossHow pany smoothes earnings Check list1Does level discretionary cost conform to past2Is there a drop in trend of discretionary costs as percentage of sales3Does cost cutting program involve significant cut in discretionary costs4Does cost cutting program eliminate fat?5Do discretionary costs show fluctuations relative to sales 6Is there a sizable jump in discretionary costs?Summary checklist of key pointsA. No single “real” net ine figure existsB. The analyst must adjust reported net ine to an earningsfigure that is relative to him/her.C. Earnings quality evaluation is important in investment,credit, audit & management decision making.D. Appraising the quality of earnings requires anexamination of accounting, financial, economic andpolitical factors.E. Earnings quality elements are both quantitative andqualitativeCash flow statement1. SCF (Statement of Cash Flows) adds in situations where Balance Sheetand Ine Statement provide limited insight2. SCF helps identify the categories into which panies fit3. Financial flexibility is a useful weapon to gain a petitive advantageand is best measured by studying the SCFThe key analytical lessonsThe cash flow statement – not the ine statement – provides the best information about a highly leveraged firm’s financial healthThere is no advantage in showing an accounting profit, the main consequence of which is incurring taxes, resulting, in turn, in reduced cash flowsCash Flow and pany Life CycleCash Flow and Start-up paniesLittle or no operating cash flowsLarge cash outflows for investing activitiesLarge need for external financing (mostly from issuing mon stock, issue long term debt)Cash Flows and Emerging Growth paniesSome operating cash flow (not enough to sustain growth)Large cash outflows to expand activitiesRequires cash flows from financingPay back some short-term debt, issue some mon stockCash Flows and Established Growth paniesFund growth from operating cash flowDepreciation is substantialRepayment of long term debt, begin to pay dividendCash Flows and Mature Industry paniesModest capital requirementsDepreciation and amortization is significantNet negative reinvestmentLarge dividend payout, reduction in long term debt Cash Flows and Declining Industry paniesNet cash user (similar to emerging growth)Lower dividends, Slim operating cash flowssell assetsCash Flows and Financial FlexibilitySafety of dividendFinance growth with internal fundsMeet other financial obligationsFinancial Ratios Analysis:Ratios are more informative than raw numbers1. Ratios provide meaningful relationships between individual values inthe financial statements2. Ratios help investors evaluate management3. Enable parison of a firm’s performance toThe aggregate economyIts industry or industriesIts major petitorsIts past performanceRatios and Financial Analysisparability among firms of different sizesProvides a profile of the firmCaution:Economic assumption of Linearity – ProportionalityNonlinearity can cause problems:Fixed costs, EOQ for inventoriesBenchmarks; Is high Current ratio good? For whom?Industry-wide norms.Accounting Methods; Timing & Window DressingLIMITATIONS1. No theory to define ‘good’2. Historical, not economic3. Most as of a single point in time4. Seasonal operations5. One-time effects6. Designed for manufacturersLiquidity Ratios: attempt to measure the ability to pay obligations such as current liabilities and the pool of assets available to cover the obligations. Liquidity is the ability of an asset to be converted to cash quickly at low cost. Converting an asset to cash occurs in one of two ways. Sell the asset, hoping it has reasonable liquidity, or in the case of a financial asset, like accounts receivable or Treasury bill, maturity brings cash. Working capital circulates from inventory to accounts receivable to cash, etc. Accounting value estimates of liquid assets are reasonable estimates of their value.Current assets (the pool of circulating cash assets available to be allocated to pay bills) minus current liabilities (the pool of obligations the business must pay in the near future) is an analytical amount called net working capital (NWC).NWC = current assets - current liabilitiesNWC/total asset ratio = net working capital / total assetsThe current ratio is the classic liquidity ratio, but is merely a variation of the idea above—what pool of circulating assets is available relative to the pool of current obligations:Current ratio = current assets / current liabilitiesQuick ratio =(cash + marketable securities + accounts receivable) /current liabilitiesCash ratio = (cash + marketable securities) / current liabilitiesCash flow from operation ratio = OCF / current liabilitiesLeverage ratios are two types: balance sheet ratios paring leverage capital to total capital or total assets, and coverage ratios which measure the earnings or cash-flow times coverage of fixed cost obligations.Balance sheet ratiosLong-term debt ratio = long-term debt / ( long-term debt + equity)Debt-equity ratio = long-term debt/equityTotal debt ratio = total liabilities / total assetsA coverage ratio, such as the times interest earned ratio, measures an amount available relative to amount owed. How many times is the obligation covered?Times interest earned = EBIT / interest expense= (EAT+Tax+Interest Exp)/ interest expenseTimes Cash flow coverage =(OCF+Tax+Interest Exp)/ interest expenseTotal assets turnover = Sales / Total assetsAccounts Receivable turnover = Sales / AR[Days A/R outstanding = 365 / Accounts Receivable turnover]Inventory turnover = Sales / Average Inventory, orCOGS / Average Inventory[Inventory Conversion = 365 / Inventory turnover]Payable turnover (deferral) = Purchase (or COGS) / AP[Days A/P outstanding = 365 / Payable turnover]Note: Cash Cycle = Inventory Conversion + Days A/R outstanding –Days A/P outstandingProfitability Ratios: refers to some measure of profit relative to revenue or an amount invested.The net profit margin measures the proportion of sales revenue that is profit available for sources of funds (EBIT-tax).Gross profit margin = gross profit / salesOperating profit margin = EBIT / salesNet profit margin = net ine / salesReturn on assets = (net ine + interest )/ average total assetsReturn on equity = net ine/ average equityPayout ratio = dividends / net earningsPlowback ratio = 1 - payout ratio= (earnings – dividends)/(net earnings) = (earnings retained in period)/( net earnings)Growth in equity = plowback ratio x ROEMarket Based Ratios•For pricing an IPO if business going public•P/E RatioWhat investors are willing to pay for a $ of earnings (Current/ Forecast)What creates a high P/E?•Market/BookUsually much different than 1.•Price/Cash FlowThe Du Pont System is a process of analyzing ponent ratios, (also called deposition) of the ROA and ROE to explain their level or changesRatio Pr 1 Leverage Turnover Asset y ofitabilit Equity Debt ROA EquityTA TA Sales Sales NI EquityTA TA NI Equity NI ROE ⨯⨯=⎪⎪⎭⎫ ⎝⎛+⨯=⨯⨯=⨯==Industry analysis:Definition of an industry: the group of firms producing products that are close substitutes for each other.Forces driving industry petition: There are five forces in determining the petitive structure of an industry, they are: (1)Entry, (2)Threats of substitutions, (3)bargaining power of buyers, (4)Bargaining power of suppliers, and (5)rivalry among current petitors, and can be pictured as:Five forces model:Potential EntrantsThreats of new entrants(Suppliers) (Buyers )0 bargaining power Industry petitors bargaining powerRivalry among existing firmsThreats of substitutesSubstitutesThreats of entry: new entrants bring to an industry new capacity, the desire to gain market share, and often substantial resources. Price can bid down or incumbent’s costs inflated as a result, reducing profitability.Barriers to entry:A. Economics of scales deter entry by forcing the entrants to e in at alarge scale and risk strong reaction from existing firms or e in at asmall scale and accept a cost disadvantage.B. Product differentiation: product differentiation means that establishedfirms have brand identification and customer loyalties. Differentiation creates a barrier to entry by forcing entrants to spend heavily to overe existing customer loyalties.C. Capital requirement: the need to invest large financial resources inorder to pete creates a barrier to entry, particularly if the capital is required for risky or unrecoverable up-front advertising or R&D.Capital requirement maybe also needed for customer credit, inventory start-up cost, as well as production cost.D. Switching costs: A barrier to entry is created by the switching cost,that is, one-time cost facing the buyer of switching from one supplier’s product to another’s.E. Access to distribution channels: the more limited the wholesale orretail channels for a product are and the more existing petitors have these tied up, obviously the tougher entry into the industry.F. Cost disadvantages independent of scale: proprietary producttechnology, favorable access to raw materials, favorable locations,government subsidy, and learning or experience curve.G. Government policy:Expected retaliation: conditions that signal the strong likelihood of retaliation to entry and hence to deter it are the following:A. A history of vigorous retaliation to entrants.B. Established firms with substantial resources to fight back.C. Established firms with great mitments to the industry andhighly illiquid assets employed in it.D. slow industry growth, which limits the ability of the industryto absorb a new firm without depressing the sales andfinancial performance of established firms.。