贝恩财务分析-Cash Flow(英文版)(powerpoint 67页)

1、 Author: Collins QianContributor: Chris Nelson bcCash FlowMarch 1998Copyright 1998 Bain & Company, Inc. 第一页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 2CU7010598KRACash FlowAgenda The importance of cash flowTypes of cash flowApplicationsCash flow stepsExerciseKey takeaways第二页，编辑于星期二：点 二

2、十八分。bcBOS Copyright 1998 Bain & Company, Inc. 3CU7010598KRACash FlowAgenda The importance of cash flowTypes of cash flowApplicationsCash flow stepsExerciseKey takeaways第三页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 4CU7010598KRA本资料来源本资料来源第四页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Com

3、pany, Inc. 5CU7010598KRACash FlowWhat is Cash Flow? Cash flow describes the movement of cash into (sources) and out of (uses) a company.Sources of cashCompanyUses of cash$第五页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 6CU7010598KRACash FlowWhy Do We Care About Cash? The market value of

4、a company is equal to the present value of its expected future cash flowsVarious stakeholders demand cashinvestors demand CASH returnssuppliers and employees require CASH compensationdebtholders demand CASH paymentsAccounting methods can be used to “manage” earnings; CASH is harder to manipulateCash

5、 is King!Cash flow is the measure of a companys strategic value.第六页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 7CU7010598KRACash FlowEarnings vs. Cash Flow* Some accounting decisions impact earnings, but not cashIn 1988, General Motors made at least four decisions that impacted earnings

6、 but not cashEarnings do not equal cash flow.*Earnings are also called after tax profits or net incomeSuccessful high growth companies tend to have high earnings, but low cash flow; successful low growth companies tend to have low earnings, but high cash flowAccounting DecisionExtended useful plant

7、life from 35 to 45 year scheduleChanged the way it accounted for its pension planAdjusted its inventory valuation policyChanged the residual value assumption for cars it leasedEarnings Impact$790MM$480MM$217MM$270MMCash ImpactNoneNoneNoneNoneTotal:$1,757MMNone第七页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 B

8、ain & Company, Inc. 8CU7010598KRACash FlowAgenda The importance of cash flowTypes of cash flowApplicationsCash flow stepsExerciseKey takeaways第八页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 9CU7010598KRACash FlowTypes of Cash Flow Net cash flow is equal to the sum of the cash flows from

9、operating, investing, and financing activities.Operating cash flowInvesting cash flowFinancing cash flowAbility of a companys recurring operations to generate cashAbility of a companys investment decisions to generate cashHow a company funds its operationsOperating profitsDecrease in working capital

10、Sale of fixed assetsLong-term issuance of shares Examples of sources:Operating losses Increase in working capitalPurchase of fixed assetsRepayment of loans Payment of dividends Examples of uses:第九页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 10CU7010598KRACash FlowOperating Cash Flow*Inv

11、esting activities not related to ongoing operations (such as the purchase or sale of divisions or companies, or investments in unrelated businesses) are not included in investing cash flow. They are included in financing cash flow.Operating cash flow excludes all cash flows related to a firms capita

12、l structurecash generation ability is independent of how a firm is financedIt excludes one-time eventsthese are not related to a firms recurring operationsOperating cash flow is used to measure the strategic value of a businessfor company valuations, operating and investing cash flows are used, not

13、financing cash flowBain is usually more interested in operating and investing* cash flow than in financing cash flowOperating cash flow measures the ability of a businesss recurring operations to generate cash.第十页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 11CU7010598KRACash FlowInvesti

14、ng Cash FlowInvestments in ongoing operations - property, plant and equipment - are included in investing cash flowcash is used to replace assets as they wear outif a business is to grow, additional assets must be acquiredin some cases, the cash used to acquire these assets is generated from the sal

15、e of existing noncurrent assetssuch cash inflows, however, seldom cover the entire cost of asset acquisitions. Often times cash flow from operations is used to finance acquisitions, or, failing a positive operating cash flow, external financing is usedPure financing activities are not included in in

16、vesting cash flow. They are included in financing cash flowpurchase or sale of divisions or companiesinvestments in unrelated businessesInvesting cash flows relating to ongoing operations are used as a measure of the strategic value of a business. Those that are purely financing/investment mechanism

17、s are used to evaluate the financial strategy of the businessInvesting cash flow measures the use of a businesss cash for the acquisition of non-current assets.第十一页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 12CU7010598KRACash FlowFinancing Cash FlowMajor types of financing cash flow in

18、clude: debt-related transactions8changes in long-term debt8interest income and expenseequity-related transactions8changes in common and preferred stock8dividends8short-term investmentslong-term asset and liability transactions8purchase or sale of a division or company8changes in long-term liabilitie

19、sFinancing cash flow captures all the non-operating cash changes experienced during the year, and it provides information on how a company is funding its operations.第十二页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 13CU7010598KRACash FlowStatement of Cash FlowsThe SCF is divided into thre

20、e sections: operating, investing, and financingEach section shows sources and uses of funds for the accounting periodThe SCF shows the amounts fordepreciation and amortizationcapital expenditurestaxes paiddividends paidIt does not show sources and uses by business unitIt does not provide much detail

21、 for example, it does not show capital expenditures by project, nor individual equipment purchasesThe SCF is not a substitute for cash flow analysisThe statement of cash flows (SCF) found in annual reports is a good source of data for constructing cash flows, but sometimes it does not have the detai

22、l required for the analysis being done.第十三页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 14CU7010598KRACash FlowAgenda The importance of cash flowTypes of cash flowApplicationsCash flow stepsExerciseKey takeaways第十四页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 15CU7010598KRACa

23、sh FlowApplications Bain case teams use cash flow (CF) analysis to value investments/acquisitions, to improve the health of business units, and to help companies manage their portfolios.Valuation (mergers, acquisitions)Business unit analysisPortfolio managementWhat is the cash generation potential o

24、f an investment/ acquisition?What are we willing to pay (in cash) for that investment/acquisition?How healthy is a business unit?What factors have effected the business units ability to generate cash/value over time?How can the business units cash management be improved?What is the overall balance o

25、f cash users/cash generators in a clients portfolio of businesses?How does this effect the clients overall cash position/outlook?What restructuring can be done to improve this profile?CF = common denominatorCF = measuring stickCF = portfolio tool第十五页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company

26、, Inc. 16CU7010598KRACash FlowAgenda The importance of cash flowTypes of cash flowApplicationsCash flow stepsExerciseKey takeaways第十六页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 17CU7010598KRACash FlowCash Flow Cookbook*Cash is defined as cash plus marketable securities minus short-term

27、 notes*I/S = income statement, SCF = statement of cash flows, B/S = balance sheet+/ - +/ - - +/ - =1.Profit before interest and tax (PBIT)2.Depreciation3.Other non-cash expenses/income4.Decrease/increase in working capital (excluding cash)5.Taxes paid6.Tax impact of interest income/expenseOperating

28、cash flowBain case teams use the following cash flow cookbook: - =7.Capital expendituresInvesting cash flow+/ - +/ - +/ - +/ - - +/ - =8.Interest income/expense9.Tax impact of interest expense/income10. Increase/decrease in long-term debt11. Increase in outstanding stocks/shares12. Dividends13. Chan

29、ges in other accountsFinancing cash flow14. Reconcile with change in cash* from Balance SheetNet cash flowSource*I/SSCF, B/S and NotesNotesB/SI/S, B/SI/SSCF, B/S and NotesI/SI/SB/SB/SSCF, B/S, and NotesB/S, I/SB/S第十七页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 18CU7010598KRACash FlowAge

30、nda The importance of cash flowTypes of cash flowApplicationsCash flow stepsExerciseKey takeaways第十八页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 19CU7010598KRACash FlowExercise - Background (p. 1)*This exercise is based on The Gillette Companys financial statements in 1996. Since severa

31、l modifications have been made to the financial statements, the information provided hereafter should not be used to analyze Gillettes financial performance.Net SalesCost of SalesGross ProfitSG&AProfit from OperationsInterest ExpenseIncome before taxesIncome TaxesNet Income1996$9,697.7MM($3,681.7MM)

32、$6,016.0MM($4,379.7MM)$1,636.3MM($111.3MM)$1,525.0MM($576.3MM)$948.7MMIncome Statement: The New England Razor Company*Use the following data to calculate the cash flow for The New England Razor Company:第十九页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 20CU7010598KRACash Flow*Deferred taxe

33、s can be a liability account, an asset account, or both (as is the case here).AssetsCurrent AssetsCashMarketable securitiesReceivablesInventoriesDeferred income taxes*Prepaid expensesTotal Current AssetsProperty, Plant & EquipmentLiabilities and Stockholders EquityCurrent LiabilitiesLoans payableCur

34、rent portion of Long-Term debtAccounts payable and accrued expensesIncome taxes payableTotal Current LiabilitiesLong-Term DebtDeferred Income Taxes*Other Long-Term LiabilitiesDividends PayableStockholders EquityCommon stockAdditional Paid-in CapitalRetained EarningsTreasury stockTotal Stockholders E

35、quity$76.9$7.0$2,724.6$1,358.2$359.3$227.2$4,753.2$5,192.0$9,945.2$656.7$14.5$1,964.9$298.6$2,934.7$1,490.4$298.9$630.2$100.1$671.4$707.0$4,168.7($1,056.2)$4,490.91995$81.6$1.6$2,290.8$1,267.6$246.8$199.3$4,087.7$4,456.6$8,544.3$634.7$26.5$1,609.8$319.4$2,590.4$1,048.4$303.4$635.1$66.7$667.1$574.8$3

36、,704.2 ($1,045.8)$3,900.3$9,945.2$8,544.3Balance SheetDecember 31, 1996 and 1995 (in $MM)1996Exercise - Background (p. 2)第二十页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 21CU7010598KRACash Flow Property, Plant and EquipmentLess accumulated depreciationNet Property, Plant, and Equipment19

37、96 (in $MM)$7,820.4$2,628.4$5,192.01995 (in $MM)$6,885.0$2,428.4$4,456.6Note 1: Property, Plant and EquipmentNote 2: DividendsThe company declared dividends of $484.2MM in 1996Note 3: Sale of assetsA loss of $22MM was incurred on equipment sold during the yearThe equipment had an original cost of $2

38、44.0MM and was sold for $40.9MMExercise - Background (p. 3)Notes to the financial statements are a critical source of information.第二十一页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 22CU7010598KRACash FlowOperating Cash Flow*Cash is defined as cash plus marketable securities minus short-te

39、rm notes*I/S = income statement, SCF = statement of cash flows, B/S = balance sheet+/ - +/ - - +/ - =1.Profit before interest and tax (PBIT)2.Depreciation3.Other non-cash expenses/income4.Decrease/increase in working capital (excluding cash)5.Taxes paid6.Tax impact of interest income/expenseOperatin

40、g cash flow - =7.Capital expendituresInvesting cash flow+/ - +/ - +/ - +/ - - +/ - =8.Interest income/expense9.Tax impact of interest expense/income10. Increase/decrease in long-term debt11. Increase in outstanding stocks/shares12. Dividends13. Changes in other accountsFinancing cash flow14. Reconci

41、le with change in cash* from Balance SheetNet cash flowSource*I/SSCF, B/S and NotesNotesB/SI/S, B/SI/SI/SI/SB/SB/SB/S, I/SB/SSCF, B/S and NotesSCF, B/S and Notes第二十二页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 23CU7010598KRACash FlowStep 1 - Profit Before Interest and TaxWhere to find:P

42、rocess:Comments:Income statementIt can be labeled in many different ways, including profit before interest and tax, profit from operations, operating profit, and earnings before interest and taxIf income statement is provided, pick number from income statementIf income statement is not provided, cal

43、culate profit before interest and tax:Profit before taxes - Interest income and other income (earned)+ Interest expense and other expenses (incurred) - Any one-time gains included in profit before taxes+ Any one-time losses included in profit before taxes= Profit before interest and tax (PBIT)The go

44、al is to get profit before interest payments, tax payments, and extraordinary items第二十三页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 24CU7010598KRACash FlowStep 1 - Profit Before Interest and Tax - AnswerProfit before interest and tax*:$1,636.3MM1996Operating cash flow begins with profit

45、 before interest and tax.*Shown as profit from operations on The New England Razor Companys income statement第二十四页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 25CU7010598KRACash FlowSteps 2 and 3 - Depreciation and Other Non-Cash Income/ExpensesWhere to find:Process:Depreciation - stateme

46、nt of cash flows, or calculate from Balance Sheet and NotesOther Non-Cash Income/Expenses - NotesReview assets and liabilities that are not taken into account in working capital (elements of working capital include current assets and liabilities with the exception of cash, tax items, and financing a

47、ssets and liabilities (e.g., interest and dividends payable)Ask two questions:was the item non-cash?was the item included in profit before interest and tax?If the answer to both is yes, adjust profit before interest and taxe.g., depreciation - add back to profit before interest and taxe.g., loss on

48、sale of asset - add back to profit before interest and taxIf answer to either question is no, make no adjustments 第二十五页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 26CU7010598KRACash FlowStep 2 - DepreciationWhere to find:Process:Statement of cash flows, or calculate from Balance Sheet a

49、nd NotesIf depreciation is provided in the statement of cash flows, pick number from thereIf not, calculate depreciation: Accumulated depreciation at year end - Accumulated depreciation at year beginning+ Depreciation from sale of asset= Depreciation expense for the yearDepreciation from sale of ass

50、et: Original cost of asset- Proceeds from sale of asset- Losses incurred= Depreciation from sale of asset第二十六页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 27CU7010598KRA Step 2 - Depreciation - Answer (p. 1) Depreciation from sale of asset= The original cost of asset - proceeds from sale

51、 of asset - losses incurred = $244.0MM - $40.9MM - $22.0MM = $181.1MMDepreciation expense for 1996 = Accumulated depreciation at year end - accumulated depreciation at year beginning + depreciation from sale of asset= $2,628.4MM - $2,428.4MM + $181.1MM = $381.1MMCash FlowDepreciation is a non-cash e

52、xpense. Therefore, it is added to profit before interest and tax in the operating cash flow.第二十七页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 28CU7010598KRACash FlowStep 2 - Depreciation - Answer (p. 2)Accumulateddepreciation (year end)Accumulateddepreciation(year beginning)Depreciation

53、fromsale of assetsDepreciation expense$2,628.4MM($2,428.4MM)$181.1MM$381.1MM$0$500$1,000$1,500$2,000$2,500$3,000 Millions of DollarsThe depreciation expense for the year can be calculated from the balance sheet and notes. - +=第二十八页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 29CU7010598K

54、RACash FlowStep 3 - Other Non-Cash Expenses - AnswerLoss on equipment sold during the year:$22.0MM (from Note 3)1996Other non-cash expenses are added to profit before interest and tax in the operating cash flow.第二十九页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 30CU7010598KRACash FlowStep

55、 4 - Change in Working Capital (Excluding Cash)Where to find:Process:Balance sheetWorking capital = current assets - current liabilitiesReview each current asset and current liabilityInclude:Exclude:Cash and cash equivalentsTax itemsinclude in taxes paid calculation (Step 5)Financing assets and liab

56、ilities, such as:interest payabledividends payablecurrent portion of long-term debtOperating assets and liabilities第三十页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 31CU7010598KRACash FlowWorking Capital Current Assets and LiabilitiesIncluded in Change in Working Capital CalculationCurren

57、t assetscashmarketable securitiesinventoryaccounts receivablepre-paid expensesdeferred income taxes Current liabilitiesaccounts payableaccrued expensesloans payableincome taxes payablecurrent portion of long-term debtinterest payabledividends payableIncluded in cash, not working capitalIncluded in c

58、ash, not working capitalIncluded in operating cash flow, but not in working capitalIncluded in financing cash flowNot all current assets and liabilities are included in working capital.Included in operating cash flow, but not in working capitalIncluded in financing cash flowIncluded in financing cas

59、h flow第三十一页，编辑于星期二：点 二十八分。bcBOS Copyright 1998 Bain & Company, Inc. 32CU7010598KRACash FlowCurrent Assets Changes in working capital asset items have cash flow impacts.means cash is being used to fund the businessmeans cash is being generated by the businessIncrease in non-cash working capitalDecrea

60、se in non-cash working capitalDecreases in current assets.Increases in current assets.Increase in inventoriescash spent to buy inventoriesIncrease in pre-paid expenses cash used to pre-pay billsReduction in inventoriescash generated by selling inventoriesReduction in accounts receivablecash received