公司金融学英语课件：Ch4 Measuring Corporate Performance

1、Chapter 4Measuring Corporate Performance1Outline 4.1Value and Value Added 4.2Measuring Market Value and Market Value Added 4.3Economic Value Added (EVA) and Accounting Rate of Return 4.4Measuring Efficiency 4.5Analyzing the Return on Assets: The Du Pont System 4.6Measuring Financial Leverage 4.7Meas

2、uring Liquidity 4.8Interpreting Financial Ratios 4.9The Role of Financial Ratios24.1Value and Value Added34An organization chart for financial ratios4.2 Measuring Market Value and Market Value Added5Market Value and Market Value Added Market Capitalization Total market value of equity, equal to shar

3、e price times number of shares outstanding. Market Value Added Market capitalization minus book value of equity.Market capitalization = (#shares) (price per share)MVA = market capitalization equitybook value6Market Value and Market Value Added Market-to-Book Ratio Ratio of market value of equity to

4、book value of equity7Market Value and Market Value Added Home Depots common stock closed fiscal 2012 at a price of $67.30 per share. There were 1,754 million shares outstanding, so8From Home Depots B/S4.3 EVA and Accounting Rate of Return9EVA Economic Value Added (EVA)Net income minus a charge for t

5、he cost of capital employedAlso called residual income: net dollar return after deducting the cost of capital10EVA EVA = Residual income = after-tax operating income cost of capital total capitalization = (1 - tax rate) interest expense + net income cost of capital total capitalization Total capital

6、ization = = long-term debt + shareholders equityHome Depots EVA The sum of net income and after-tax interest is its after-tax operating income, which is what the firm would earn if it had no debt and could not take interest as a tax-deductible expense.11Accounting Rate of Return Return on Capital (R

7、OC) Net income plus after-tax interest as a percentage of long-term capital Return on Assets (ROA) Net income plus after-tax interest as a percentage of total assets Return on Equity (ROE) Net income as a percentage of shareholders equity12Accounting Rate of ReturnHome Depot Profitability Measuremen

8、ts (Accounting Rate of Return)(the firms profits per dollar of assets)13EVA and Accounting Rate of Return EVA, or residual income, is a better measure of a companys performance than is accounting income.Accounting income is calculated after deducting all costs except the cost of capital.EVA recogniz

9、es that companies need to cover their opportunity costs before they add value.1415An organization chart for financial ratios4.4 Measuring Efficiency16Measuring Efficiency (For Home Depot)orMeasure how much sales are generated by each dollar of total assets, and therefore it measures how hard the fir

10、ms assets are working.17Measuring Efficiency18 (For Home Depot)Measuring Efficiency19Measures the firms sales as a multiple of its receivables(For Home Depot)4.5 Analyzing the Return on Assets: The Du Pont System20The DuPont System DuPont Analysis (also known as the DuPont identity, DuPont equation,

11、 DuPont Model or the DuPont method) is an expression which breaks ROA (ROE) into two (three) parts. The name comes from the DuPont Corporation that started using this formula in the 1920s.21The DuPont System22The DuPont System23The DuPont SystemThis breakdown of ROA into the product of turnover and

12、margin is often called the Du Pont formula.24The Du Pont System2526Profit margin and asset turnover for 43 industries for year ending March 20134.6 Measuring Financial Leverage27Measuring Financial LeverageLeverage ratios measure how much financial leverage the firm has taken on.28Measuring Financia

13、l LeverageAnother measure of financial leverage is the extent to which interest obligations are covered by earnings.29Measuring Financial LeverageROAmeasures the proportion by which interest expense reduces profits304.7 Measuring Liquidity31Measuring LiquidityMeasuring Liquidity4.8 Interpreting Fina

14、ncial Ratios3435Interpreting Financial Ratios When assessing company performance, managers usually look first at how the financial ratios have changed over time, and then they look at how their measures stack up in comparison with companies in the same line of business. There is no right level for,

15、say, the asset turnover or profit margin, and if there were, it would almost certainly vary from year to year and industry to industry.364.9 The Role of Financial Ratios37The Role of Financial Ratios Some examples of who would be likely to examine financial ratios Leverage ratios are of interest to

16、banks or other investors lending money to the firm. They want to be assured that the firm is not borrowing more than it can reasonably be expected to repay. Liquidity ratios are also of interest to creditors who prefer that a firms current assets are well in excess of its current liabilities. Liquid

17、ity ratios are especially important to those who lend to the firm for short periods, for example, by extending trade credit. If a firm buys goods on credit, the seller wants to know that, when the bill comes due, the firm will have enough cash on hand to pay it. Efficiency ratios might be of interest to stock mar