本学期资料 财务报表 PPT Chp012

1、CHAPTER TWELVE,McGraw-Hill/Irwin,Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.,Chapter 12,Prepared by: Stephen H. Penman Columbia University With contributions by Nir Yehuda Northwestern University Mingcherng Deng University of Minnesota Peter D. Easton and Gregory A. Sommer

2、s Notre Dame and Southern Methodist Universities Luis Palencia University of Navarra, IESE Business School,12-2,What You Will Learn from this Chapter,How ratios aggregate to explain Return on Common Equity (ROCE) How economic factors determine ratios How financial leverage affects ROCE How operating

3、 liability leverage affects ROCE The difference between Return on Net Operating Assets (RNOA) and Return on Assets (ROA) How profit margins, asset turnovers and their composite ratios drive RNOA How borrowing costs are analyzed How profitability analysis can be used to ask penetrating questions rega

4、rding the firms activities,12-3,The Big Picture for this Chapter,Valuation involves forecasting residual earnings and residual earnings growth,ROCE,Growth in Book Value,What drives ROCE? This Chapter,What drives growth? Next Chapter,So, what drives residual earnings?,12-4,Analysis is the Preamble to

5、 Forecasting and Valuation,Analysis establishes where the firm is now Forecasting asks how it will be different in the future,ROCE Driver,Growth Driver,12-5,Analyzing ROCE: The Scheme,12-6,First Level Breakdown of ROCE:The Analysis of Leverage,The Effects of Leverage: A. Financing Leverage B. Operat

6、ing Liability Leverage,12-7,A. Analysis of Financing Leverage (FLEV),So, ROCE is a weighted return to operating activities and financing activities: or, RNOA = OI (After tax) / NOA(Return on Net Operating Assets) FLEV = NFO / CSE(Financial Leverage) NBC= NFE (after tax) / NFO(Net Borrowing Cost) SPR

7、EAD= RNOA NBC(Operating Spread),Spread,12-8,The Financial Leverage Equation,ROCE = RNOA + FLEV RNOA NBC The equation says that ROCE is driven by three factors: Profitability of operations: RNOA Financial Leverage: FLEV = NFO CSE Operating Spread: RNOA - NBC,12-9,How Financial Leverage Explains the D

8、ifference Between ROCE and RNOA,12-10,General Mills Inc.: Reformulated Balance Sheet,12-11,Financial Leverage: General Mills Inc., 2010,(In millions of dollars, average for year) NOA11,632OI 1,177 NFO 6,099NFE 251 CSE (before MI) 5,533 CI 926 FLEV = 6,099/5,533 = 1.102 ROCE= 16.7% RNOA= 10.1% NBC= 4

9、.1% ROCE = RNOA + FLEV (RNOA NBC) = 10.1% + 1.102 (10.1% - 4.1%) = 16.7%,12-12,General Mills: What If?,What if RNOA fell to 2.0%? ROCE = 2.0% + 1.102 (2.0% - 4.1%) = -0.3% Leverage becomes unfavorable!,12-13,Financial Leverage for a Firm with Negative Leverage: Microsoft Corporation, 2003,(In millio

10、ns of dollars) NOA12,829OI6,277 NFA36,906NFI1,548 CSE49,735CI7,825 FLEV = - 0.742ROCE=15.73% RNOA=48.93% RNFA= 4.19%,12-14,Microsoft: What If?,What if Microsoft paid a special dividend of $33 billion (as it did in 2004)? NOA12,829 NFA 3,906 CSE16,735 FLEV= - 0.233 ROCE = 48.93% - 0.233 (48.93% - 4.1

11、9%) = 38.49% Note: Paying dividends increases leverage and increases ROCE,12-15,Operating liabilities lever the Return on Net Operating Assets What would be the operating profitability without operating liabilities? where Implicit Interest on Operating Liabilities (as a benchmark) = Short-term Borro

12、wing Rate (after tax) x Operating Liabilities The Effect of OLLEV: where,RNOA = ROOA + (OLLEV x OLSPREAD),B. The Analysis of Operating Liability Leverage (OLLEV),12-16,Operating Liability Leverage: General Mills Inc.,OA17,126OI1,177 OL 5,494 NOA11,632 OLLEV = 5,494/11,632 = 0.472 Short-term borrowin

13、g rate = 0.7% (after tax) Implicit cost of operating liabilities = 5,494 0.007 = 38 = 10.1%,12-17,A Case of Extreme Operating Liability Leverage: Dell Inc.,Net Operating Assets (NOA) are negative!Does this leverage add value? Yes! Residual income from operations = $ 2,656 (0.09 x -2028) = $2,839 mil

14、lion,12-18,Summing Financial Leverage and Operating Liability Leverage Effects on ROCE,ROCE = ROOA + (RNOA ROOA) + (ROCE RNOA),For General Mills, 16.7% = 7.1% + (10.1% - 7.1%) + (16.7% - 10.1%) = 7.1% + 3.0% + 6.6%,12-19,Return on Net Operating Assets and Return on Assets,Problems with ROA: Financia

15、l assets in denominator Financial income in numerator Operating liabilities not in denominator Net income is not comprehensive income Median ROA is 7.1% since 1962 for U.S firms Median RNOA is 10.5%,12-20,RNOA and ROA for Selected Firms, 2007,12-21,FLEV and Debt-to-Equity Ratios,Problems with Debt-t

16、o-Equity ratio: Excludes financial assets (which effectively defease debt) Includes operating liabilities Median Debt-to-Equity is 1.22 Median FLEV is 0.43,12-22,Second-Level Breakdown of ROCE: Drivers of Operating Profitability, Operating profit margin: Asset turnover: The ability to generate sales for a given asset base Effect of financial le