贝恩分析方法

1、 Author: Collins QianRatio AnalysisMarch 19981Agenda Using ratiosTypes of key ratiosprofitabilityturnoverleverageliquiditycoverageReturn on EquityRatio exercisesForecasting exerciseAbbreviationsKey takeaways2Analyzing Ratios Ratios in isolation are meaningless. A companys ratios must be examined ove

2、r time and/or against its competitors ratios.Historical comparisonCompetitive comparisonCompare present ratios with same companys historical ratiosIn stable situations, historical ratios may be used to project future performanceCompare a companys ratios with similar firms ratios or with industry ave

3、rages at the same point in timeLook for trendsLook at relative performance3The Art of Ratio Analysis Which ratios are most important in a given situation?What items should be included/excluded in calculating the ratios?How much influence does management have over the ratios?What do the ratios say ab

4、out the firms strategy?Ratio analysis is an art as well as a science.4The Need for Judgment Potential ProblemManagement can substantially influence financials in the short termImplicationsNeed to use judgment to understand financialsRatio analysis requires keen judgment.Financial statement data is h

5、istorical, not pro formaCross-company comparisons are meaningless if adjustments are not made for different accounting conventionsThe timing of the reporting period influences funds flows and requirementsNeed to understand that history does NOT necessarily predict futureNeed to be very sensitive abo

6、ut industry-specific seasonality and cyclicalityNeed to standardize across companies to adjust for different accounting methods5Agenda Using ratiosTypes of key ratiosprofitabilityturnoverleverageliquiditycoverageReturn on EquityRatio exercisesForecasting exerciseAbbreviationsKey takeaways6Types of R

7、atiosRatios help us understand how well a company is performing. Specifically, how much return is it generating with what level of risk?How well does the company manage costs relative to revenues?ReturnRiskCoverageInterest chargeFixed charge coverageLiquidityCurrent ratioQuick ratioLeverageAsset to

8、equityDebt to equityDebt to total capitalTurnover ReceivablesInventoryPayablesAssetProfitabilityOperating marginROSGross marginHow effective is the company in managing its resources?What are the respective claims of debt and equity owners? How risky is the business?Is the company able to meet its sh

9、ort-term obligations?Is the company able to meet its long-term obligations?7Profitability Ratios - Definitions* This is not a profitability ratio, but it does impact ROSProfitability ratios use line items from the income statement.RatiosDefinitionsGross profit margin(or gross margin)Sales - cost of

10、goods soldSalesOperating profit margin(or operating margin)Earnings before interest and taxesSalesReturn on sales(ROS)Profit after taxSalesEffective tax rate*TaxesProfit before tax8Profitability Ratios - Description Profitability (or margin) ratios are a function of both the industry and a companys

11、position within the industryboundaries are set by the operating characteristics of the industrywithin these boundaries profitability ratios are determined by a players relative positionBain typically uses gross profit and operating profit to measure profitabilityROS can be altered by non-operating a

12、ctivities, such as sources of financing or tax rate manipulationsExtraordinary items, because they are for unusual events, such as discontinued items or asset sales, are excluded when we analyze the performance of the base businessProfitability ratios measure a firms ability to manage costs relative

13、 to revenues.9Profitability Ratios - Over Time Gross profit margin should stay constant or increase because cost of goods sold should be a constant percent of sales or should decrease as company gets price increases and/or volume discounts Operating margin should increase as fixed administrative and

14、 sales costs are spread over a greater number of unitsEffective tax rate should stay constant or decrease since a larger firm is able to take advantage of more tax sheltersAs a company grows, its return on sales should increase.Higher return on sales 10Profitability Ratios - Market Leader Gross prof

15、it margin should be higher since a market leader can typically charge more for its goods and/or receive the greatest volume discounts from suppliersOperating profit margin should be significantly higher, because higher volume means fixed costs are spread over more units and because the gross profit

16、margin is higherThere should be no significant difference in the effective tax rateReturn on sales should be significantly higher because the operating margin should be significantly higherThe market leader in an industry should have the best profitability ratios.This is consistent with the ROS/RMS

17、concept which says that companies with high relative market share have high returns on sales11Turnover Ratios - DefinitionsNote: Average=(Year Beginning+Year End)/2* Sales is often a good proxy*Cost of goods sold is often a good proxy*Typically we use 365 days (i.e., 1 year) for the periodTurnover r

18、atios use a combination of income statement and balance sheet items.RatiosDefinitionsReceivables turnoverCredit sales in period*Accounts receivable average balanceInventory turnoverCost of goods sold in periodAverage inventory in periodPayables turnoverPurchases on account*Accounts payable average b

19、alanceAsset turnoverSales in periodAverage assetsAny turnover ratio can be expressed as a period ratio which measures the number of days in the cycleDays in period*Turnover ratioPeriod ratio =12Turnover Ratios - Transaction Cycle* Accounts payable, inventory, and accounts receivable are the major co

20、mponents of working capitalIt is critical for a firm to manage its payables, inventory, and receivables.*Cash inflowCash collected for sales madeCash outflowRaw materials purchasedCash disbursed for raw materials purchasedFinished goods inventorySales madeAccounts receivable periodAccounts payable p

21、eriodXXX13Turnover Ratios - Description Turnover ratios measures how many times per year a given resource is consumedPeriod ratios measure the number of days that is takes for a given resource to “turn over”Managements objective is to stretch out the accounts payable period (i.e., have low accounts

22、payable turnover) and shorten the periods for accounts receivable and inventory (i.e., have high accounts receivable and inventory turnover)Turnover ratios measure how well a firm is managing its resources.14Turnover Ratios - Tradeoffs Ratio ImprovementsDecrease the receivables collection periodi.e.

23、, collect the accounts receivable fasterDecrease the inventory holding periodi.e., sell completed products fasterIncrease the account payable periodi.e., take longer to pay suppliersStrategic TradeoffIf the receivables collection period is too short, customers may buy at a competitor that has more g

24、enerous credit terms. (Often this period is dictated by industry norms)If the inventory holding period is too short the company may not have enough inventory to fill a big order. Also, the company may not be able to outlast a strike, either at its own facility or at one of its primary suppliers faci

25、litiesIf the accounts payable period is too long, suppliers could raise their prices, charge interest (often at very high rates), or even refuse to supply the firm on credit. Also, workers may get restless if they have to wait longer to receive their paychecks.Managing turnover ratios means managing

26、 strategic trade-offs.15Leverage Ratios - Definitions* All three ratios here are called “leverage” ratios by different people, so be sure to understand which ratio is being used when someone is talking about leverageLeverage ratios use line items from the balance sheet.Ratios*DefinitionsDuPont lever

27、age ratioAssetsEquityDebt to equity ratioLong-term debtEquityDebt to total capitalor debt to total assets ratioTotal liabilitiesDebt + equityTotal liabilitiesAssets=16Leverage Ratios - Description Money can be raised from debt sources (banks, bond markets) or equity sources (stockholders)Leverage ra

28、tios reflect both the financing policies of the firm and the riskiness of the businessIn order to analyze a firms leverage ratios, one needs to understand the definitions of debt and equityLeverage ratios measure the respective claims of debt and equity holders.17Debt Versus Equity Contractual payme

29、nts over the life of the loanInvestor legally guaranteed full return of principle plus interestnothing above thatIn case of liquidation, debtor has preferential claim on proceeds from sale of assetsNo guaranteed payments from common stockInvestor “owns” part of firmright to appreciation of firms val

30、ueIn case of liquidation, equity owner takes what is left (may be nothing)Debt and equity have very different characteristics.Debt = anything that contractually requires payments to be made before the equity holders have access to the firms earningsEquity = the value of the firm left over after all

31、the debt holders have been paidLower risk to investor;investor demands lower returnHigher risk to investor;investor demands higher return18Debt Questions - Debt and Equity Debt in Leverage RatiosBain typically looks only at long-term debt (debt with a term of 1 year or more)Accountants measure debt

32、as short-term debt plus long term debtEquity in Leverage RatiosBain typically uses the market value of equity (I.e., the share price multiplied by the number of shares). Others may use the book value of equity, which is the amount shown on the balance sheet19Debt Questions Accounts payable?Short-ter

33、m debt?Long-term debt?Cancelable leases?Noncancelable leases?Preferred stock?Common stock?Deferred tax?Would you define the following as debt?20Debt Answers Accounts payableShort-term debtLong-term debtCancelable leasesNoncancelable leasesSome items are clearly debt, others are clearly not debt, sti

34、ll others are debatable.Not debt. It is part of working capital, and is “secured” by the inventory and receivables that it is used to financeDebt, if it used to finance capital expansions of the companyNot debt, if it used to finance working capitalDebt.Not debt. Because they are cancelable, they ar

35、e not contractual obligationsDebt. Because they are non-cancelable, they are contractual obligations. (For all publicly traded US companies, the present value of all the noncancelable lease payments must be disclosed in balance sheet footnotes.)Debatable Argument for equity - contractual obligations

36、 to pay dividends on preferred stock are met after debtholders claims are metArgument for debt - there is a contractual obligation to pay dividends on preferred stock before common stock dividend payments can be madeNot debt. It is equityCommon stockDebt, but debatable. Often considered debt given l

37、ong-term natureDeferred taxPreferred stock21Liquidity and Coverage Ratios - DefinitionsLiquidity ratios use line items from the balance sheet. Coverage ratios use line items from the income statement.RatiosDefinitionsCurrent ratioCurrent assetsCurrent liabilitiesQuick ratio(acid test)Cash + marketab

38、le securities + receivablesCurrent liabilitiesInterest coverage ratioEarnings before interest and taxesInterest expenseFixed charge coverageEarnings before interest and taxesAll essential payments (including lease payments)Liquidity:Coverage:22Liquidity and Coverage Ratios - Description Acceptable v

39、alues for these ratios differ by industry. However, when the current ratio or coverage ratios fall below 1 that means the firm is unable to meet its obligationsIt is a useful exercise to calculate how much revenue could drop (or costs rise) before coverage would drop below 1Liquidity ratios measure

40、the firms ability to meet its short-term obligations. Coverage ratios measure the firms ability to meet its long-term obligations.23Agenda Using ratiosTypes of key ratiosprofitabilityturnoverleverageliquiditycoverageReturn on EquityRatio exercisesForecasting exerciseAbbreviationsKey takeaways24Retur

41、n on Equity Return on equity is defined as profit after tax (earnings) divided by equity. It relates economic outputs (profit) to inputs (equity).It tells us the amount of profits the company earned on each dollar the stockholders invested in the firm. It is important to note that not all of the ear

42、nings are paid to the stockholders when they are earned.Only some portion of the earnings will be returned now in the form of dividends. The remainder (retained earnings) will be re-invested in the company to finance growthThe size of the divided is decided by the board of directors; an individual s

43、tockholder has no influence over when he/she actually receives the return that he/she has earnedIt is a combination of profitability, turnover, and leverage ratiosReturn on equity, ROE, is the acid test of success for a business.25DuPont Formula By separating ROE into its components, one can gain in

44、sight into how to improve the performance of a business.ROE = Profit after taxEquityROE = Profit after taxSalesSalesAssetsAssetsEquityXXReturn on AssetsLeverageROSAsset turnoverThis is known as the DuPont formulaROE = Profitability X Turnover X Leverage26Agenda Using ratiosTypes of key ratiosprofita

45、bilityturnoverleverageliquiditycoverageReturn on EquityRatio exercisesForecasting exerciseAbbreviationsKey takeaways27Unidentified Industries Exercise The objective of this exercise is to test your understanding of financial ratios.Exercise: The balance sheets (in percentage form) and selected ratio

46、s for six industries are given on the following page. Please match each of the six industries to the financial informationCoal miningGrocery storesHotels and motelsLegal servicesPackaged softwarePotato chips and snacks 28Unidentified Industries Exercise - DataIndustry Balance Sheet (%)ABCDEF*Ratios

47、do not tie to balance sheet items because they were calculated using a slightly different data set. *This is NOT inventory turns. Inventory turns would be COGS to inventory.*Sales to assetsSource: Industry Norms Key Business Ratios, Dun & BradstreetCashAccounts receivableNotes receivableInventoryOth

48、er currentTotal current assetsFixed assetsOther non-current assetsTotal assetsAccounts payableBank loansNotes payableOther current liabilitiesTotal current liabilitiesOther long-term liabilitiesDeferred creditsNet worthTotal liabilities & net worthRatios*Quick ratio (times)Current ratio (times)Total

49、 liabilities to net worth (%)Collection period (days)Sales to inventory (times)*Assets turns* (times)Gross margin (%)Return on sales (%)Return on assets (%)Return on equity (%) 9.8%4.00.61.44.620.465.114.5 100.0%3.60.12.411.817.944.60.337.2 100.0%0.7x1.2x127%9.1 days78.5x0.7x 64%7%5%14% 9.3%21.20.22

50、.02.735.451.712.9100.0%15.23.315.133.625.540.9 100.0%0.9x1.1x87%52.2 days7.9x1.9x 38%3%7%16% 4.8%28.614.64.552.535.112.4 100.0%15.40.40.414.030.217.51.750.6 100.0%1.6x2.5x62%30.9 days23.7x2.9x29%2%5%7% 14.1%5.30.932.63.956.830.412.8 100.0%15.70.23.011.630.522.00.347.2100.0%0.6x1.9x93%2.6 days19.0 x5

51、.0 x22%1%6%13% 31.0%18.80.80.713.965.226.08.8 100.0%4.00.44.826.335.510.81.252.5 100.0%1.4x1.9x67%51.8 days63.1x4.0 x57%12%20%29% 22.1%32.20.54.78.568.018.613.4100.0%10.60.22.023.336.110.31.652.0 100.0%1.5x2.0 x74%65.3 days39.9x1.9x 59%6%10%19%29Unidentified Industries Exercise - Answer Characterist

52、ics:Financial ratios:Companies:Hotels and MotelsVery high fixed assetsLow inventoryShort collection periodLow asset turnoverHigh gross marginHigh leverageFixed assets = 65%Inventory = 1%Collection period = 9 daysAsset turns = 0.7xGross margin = 64%Total liabilities to net worth = 127%ACoal MiningVer

53、y high fixed assetsLow inventoryLong collection periodFixed assets = 52%Inventory = 2%Collection period = 52 daysBPotato Chips & SnacksLow percentage of cashLong collection cycleCash = 5%Collection = 31 daysCGrocery StoresHigh percentage of cashLow accounts receivableShort collection periodHigh inve

54、ntoryGood liquidity ratiosCash = 14%Accounts receivable = 5%Collection period = 3 daysInventory = 33%Quick ratio = 0.6x; current ratio = 1.9xDLegal ServicesHigh percentage of cashAlmost zero inventoryHigh asset turnoverHigh profitabilityLong collection periodCash = 31%Inventory = 1%Assets turns = 4.

55、0 xGross margin = 57%; ROS = 12%; ROE = 29%Collection period = 52 daysEPrepackaged SoftwareHigh percentage of cashHigh accounts receivableLow inventoryHigh gross marginLow fixed assetsSignificant intangible assets (patents)Cash = 22%Accounts receivable = 32%Inventory = 5%Gross margin = 59% Fixed ass

56、ets = 19%Other non-current assets = 13.4%F30Gillette Exercise Exercise: Please calculate Gillette Companys key financial ratios based on its 1996 annual report ProfitabilityTurnoverLeverageLiquidity and coverageThe objective of this exercise is to test your ability to calculate key financial ratios.

57、Note: For this exercise, do not include merger-related costs in the calculations.31Gillette Exercise - Profitability Ratios* This is not a profitability ratio, but it does impact ROS*Excluding merger-related costs. Non-operating charges should not be included in the operating profit margin.RatiosGil

58、lette Ratio CalculationsGross profit margin(or gross margin)Sales - cost of goods soldSalesOperating profit margin(or operating margin)Earnings before interest and taxes*SalesReturn on sales(ROS)Profit after tax*SalesEffective tax rate*TaxesProfit before tax6,016.09,697.7= 62%2,049.39,697.7= = 21.1%

59、1,231.79,697.7= 12.7%576.31,525.0= 37.8%(p.24)(p.24)(p.24, p.27)(p.24)Page Number in 1996 Annual Report1,636.3 + 413.09,697.7=948.7 + 283.09,697.7=32Gillette Exercise - Turnover RatiosNote: Average=(Year Beginning+Year End)/2* Sales is often a good proxy*Cost of goods sold is often a good proxyRatio

60、sGillette Ratio CalculationsReceivables turnoverCredit sales in period*Accounts receivable average balance9,697.7(2,724.6 + 2,290.8)/2= 3.87(p.24, p.25)or3653.87= 94 daysInventory turnoverCost of goods sold in periodAverage inventory in period3,681.7(1,358.2 + 1,267.6)/2= 2.80(p.24, p.25)or3652.80=