现金分析的演示

1、Cash Flow AnalysisSession 62022/8/211This sessionHow to calculate and analysis a corporations Cash Flow analysisHow to evaluate the solvency of a company based on its balance sheet and cash flows2022/8/212In case you missed the last session.We covered .I&EBalance SheetsThe linkages between I&E and B

2、alance Sheets2022/8/213Business ChallengesEarn ProfitsConvert Profits to Cash as Fast as Possible2022/8/214Cash FlowFrom Operating ActivitiesFrom Investing ActivitiesFrom Financing Activities2022/8/215Balance SheetAssetsCash+Accounts Receivable+Inventory+Prepaid Expenses+Property, Plant & Equipment+

3、Accumulated Depreciation= Total AssetsLiabilities & EquityAccounts Payable+ Accrued Operating Expenses+ Accrued Interest Payable+ Income Tax Payable+ Notes Payable+ Capital stock+ Retained Earnings= Total Liability & EquityCash Flow StatementCash Flow From Operating ActivitiesNet Income- Accounts Re

4、ceivable Increase- Inventory Increase- Prepaid Expenses Increase+ Depreciation Expense- Accounts Payable Increase- Accrued Expenses Increase- Income Tax Payable= Cash Flow form Operating Activities+ Cash Flow From Investing ActivitiesPurchases of Property, Plant & Equipment+ Cash Flows From Financin

5、g ActivitiesShort-Term Debt Borrowing+ Long-Term Debt Borrowing+ Capital Stock Issue+ Dividends Paid to Stockholders= Increase in Cash for YearBalance Sheet / Cash Flow Interactions 2022/8/216Cash Flow From OperationsBalanceSheetlastyearBalanceSheetthisyearIncome & Expensethis yearChanges in the Bal

6、ance sheet “closets plus the depreciation adjusted income2022/8/217Cash Flow from OperationsProfit (“the bottom line” of the I&E Statement)Plus 7 year-to-year change adjustments (Balance Sheet)Accounts receivableInventoryPrepaid expensesDepreciationAccounts PayableAccrued ExpensesIncome Tax PayableC

7、ash flow, like theBalance Sheet usesCASH ACCOUNTINGNot ACCRUAL ACCOUNTING2022/8/218Operating Cash Flow CommentsNet Income is from the bottom line of I&E Statement (Depreciation Adjusted)Increases in Operating Assets decrease cash flow from profit (AR, Inventory, Prepaid Expenses) Increases in liabil

8、ities “help” cash flow (AP, Accrued Expenses, Income Tax Payable)2022/8/219Growth Consumes Ca$h!Increasing revenue with controlled expenses will result in increased profitsRevenue increases also drive increases in operating assetsCash increases are not as large as profit increases but are delayed be

9、cause of AR Declining businesses experience opposite effect and can experience increased “cash flow” over profit changes 2022/8/2110Depreciation & Operating Cash FlowDepreciation: Since the company paid cash for the fixed assets when it bought them, the company does not consume cash a second time wh

10、en it uses themThe depreciation of the I&E Statement is therefore “added back” for cash flow purposes 2022/8/2111Balance SheetAssetsCash+Accounts Receivable+Inventory+Prepaid Expenses+Property, Plant & Equipment+Accumulated Depreciation= Total AssetsLiabilities & EquityAccounts Payable+ Accrued Oper

11、ating Expenses+ Accrued Interest Payable+ Income Tax Payable+ Notes Payable+ Capital stock+ Retained Earnings= Total Liability & EquityCash Flow StatementCash Flow From Operating ActivitiesNet Income- Accounts Receivable Increase- Inventory Increase- Prepaid Expenses Decrease+ Depreciation Expense-

12、Accounts Payable Increase- Accrued Expenses Increase= Cash Flow form Operating ActivitiesCash Flow From Investing Activities- Purchases of Property, Plant & EquipmentCash Flows From Financing Activities+ Short-Term Debt Borrowing+ Long-Term Debt Borrowing+ Capital Stock Issue- Dividends Paid to Stoc

13、kholders= Increase in Cash for YearBalance Sheet / Cash Flow Interactions 2022/8/2112Purchases of Property, Plant & EquipmentFixed Assets to modernize or expand capacity Will be capitalized (depreciated)2022/8/2113The Depreciation StoryCapital assets are a cash flow out when the asset is bought (Cas

14、h Flow/Investing)The bought assets are added to the Property, Plant & Equipment line of the Balance SheetThe appropriate depreciation is allocated for in the period that it is “used” on the I&EThe sum of the accumulated depreciations from the I&E is subtracted from the purchase price of the assets o

15、n the balance sheetThe allocated I&E depreciation is “added back” to the Income in the Cash Flow analysis2022/8/2114Balance SheetAssetsCash+Accounts Receivable+Inventory+Prepaid Expenses+Property, Plant & Equipment+Accumulated Depreciation= Total AssetsLiabilities & EquityAccounts Payable+ Accrued O

16、perating Expenses+ Accrued Interest Payable+ Income Tax Payable+ Notes Payable+ Capital stock+ Retained Earnings= Total Liability & EquityCash Flow StatementCash Flow From Operating ActivitiesNet Income- Accounts Receivable Increase- Inventory Increase- Prepaid Expenses Decrease+ Depreciation Expens

17、e- Accounts Payable Increase- Accrued Expenses Increase= Cash Flow form Operating ActivitiesCash Flow From Investing Activities- Purchases of Property, Plant & EquipmentCash Flows From Financing Activities+ Short-Term Debt Borrowing+ Long-Term Debt Borrowing+ Capital Stock Issue- Dividends Paid to S

18、tockholders= Increase in Cash for YearBalance Sheet / Cash Flow Interactions 2022/8/2115Cash From Financing ActivitiesWhen operating cash flows are insufficient to fund company operations, the finance department must raise cash for the companyLoansLine of credit (short-term debt)Notes, Bonds or Debe

19、ntures (long-term debt)Issue StockDividends paid to Stockholders are considered a financing cash flow 2022/8/2116IBM 2001 Cash Flow (M$)Cash Flow From: 2001 2000 1999Operations 14,265 9,274 10,111Investing (6,106) (4,248) (1,669)Financing (5,309) (6,359) (8,625)Exchange rate changes (83) (1470) (149

20、)Net Change in Cash 2,767 (1,480) (332)Cash on 1/1 3,563 5,043 5,375Cash on 12/31 6,330 3,563 5,043Days of cash 30 16 232022/8/2117IBM 2001 Cash Flow from Operations (M$) 2000 2001 Net Income 7,723 8,093Depreciation 4,195 4,513Amortization of Software 625 482Deferred income taxes 658 29Gains on asse

21、t sales (317) (792)Write-down on impaired investments 405 Receivables 3,284 (4,720)Inventories 337 (55)Other assets (545) (643)Accounts payable (969) 2,245Other Liabilities (1,131) 122Cash from Operations 14,265 9,2742022/8/2118IBM 2001Cash Flow from Investing (M$) 2001 2000Plant, rental machines an

22、d other property (5,660) (5,616)Disposition of Plant, rental machines and other property 1,165 1,619Investments in software (655) (565)Purchases of marketable securities and other investments (778) (750)Proceeds from marketable securities and other investments 738 1,393Acquisitions (916) (329)Net Ca

23、sh used in Investing Activities (6,106) (4,248) 2022/8/2119IBM 2001Cash Flow from Financing (M$) 2001 2000Proceeds from new debt 4,535 9,604Short-term borrowings 2,926 (1,400)Payments to settle debt (7,898) (7,561)Preferred stock transactions net (254) Common stock transactions net (3,652) (6,073)Ca

24、sh Dividends paid (966) (929)Net Cash Used in Financing (5,309) (6,359)2022/8/2120Motorola 2000 Cash FlowsCash Flow From: 2000 1999 1998Operations (1,164) 2,140 1,295Investing (4,091) (960) (3,079)Financing 5,119 788 1,872Exchange rate changes (100) (33) 34Net Change in Cash (236) 1,935 122Cash on 1

25、/1 3,537 1,602 1,480Cash on 12/31 3,301 3,537 1,602Days of Cash 33 40 182022/8/2121Motorola 2000 Cash Flow from Operations (M$)Net Income 1,318 Depreciation 2,522 Charges for re-organization 1,483 Deferred income taxes 658 Acquired in-process R&D charges 332Sales of investments & businesses (1,570)D

26、eferred income taxes 239Write-down on impaired investments 405 Receivables (1,471) Inventories (2,305) Other assets (532) Accounts payable (666) Other Liabilities (514) Cash from Operations (1,164) 2022/8/2122Cooking!Controlling discretionary expensesRepairs & maintenanceTraining & developmentTravel

27、Increasing revenue“Stuffing the channels”LyingFraud - go to jail2022/8/2123EnronitisEnronDynergy Inc., Reliant Resources Inc., CMS EnergyTycoGEBoeingIBM2022/8/21243 Key Financial Aspects of a BusinessCash FlowsMaintaining SolvencyProfitability2022/8/2125Solvency - AgainThe Current Ratio: Test of Short-Term SolvencyCurrent Ratio = current assets / current liabilitiesGeneral Rule of thumb: Should be gr