财务报表分析英文课件Cha

ROCE: return to common
Shareholders on7ly
Return on Assets (ROA)
ROA presents profitability independent of the source of financing – Does not consider leverage – Measure of how well the firm uses its assets to generate income – As if the firm is financed by equity alone
What to compare?
1. The planned ratio for the period
2. The corresponding ratio from a prior period (time-series analysis)
3. The corresponding ratio for another firm in the same industry (cross-section analysis)
as a whole
b. Return on common equity (ROCE): return to common shareholders only
c. Earnings per common share
.
6
Analysis of Profitability
ROA: return to .the firm
risk of investment alternatives, and the role of analysis in providing risk and return information.
2. Understand the usefulness of the rate of return on assets (ROA) as a measure of a firm’s operating profitability.
Total
389 - 16 = 373
Next income before tax
86 + 16 = 102
Less Income tax expense
26 + 4.8 = 30.8
Next Income
60 + 16 – 4.8 = 71.2
.
10
Horrigan Corporation ROA
4. The average ratio for other firms in the same industry (cross-section analysis)
.
5
Analysis of Profitability a. Return on assets (ROA): return to the firm
.
1
The value of a firm to equity investors
risk
V = D1/(1+r) + D2/(1+r)2 + D3/(1+r)3 …….
profitability
.
2
The value of a firm to creditors
risk
V = I1/(1+r) + I2/(1+r)2 + I3/(1+r)3 + P/(1+r)3
26
Next Income
. 60
9
Horrigan Corporation-assuming no debts
Year 4
Sales Revenue
$ 475
Less expense:
COGS
280
Selling
53
Administrative
22
Depreciation
18
Interest
16 - 16
profitability
Ii: interest revenues in period i P: return of principal
.
3
Financial Statement Analysis
1.Understand the relation between the expected return and
1) If all equity, the firm won’t pay $16 interest expense,
which increase net income by $16;
2) at 30% tax rate, government will collect an additional amount of $4.8 (16*30%) as tax, then the actual increase of net income is (16 – 4.8).
.
8
Horrigan Corporation
Year 4Βιβλιοθήκη Sales Revenue
$ 475
Less expense:
COGS
280
Selling
53
Administrative
22
Depreciation
18
Interest
16
Total
389
Next income before tax
86
Income tax expense
3. Understand the usefulness of the rate of return on common shareholders’ equity (ROCE) as a measure of profitability.
4. Understand the strengths and weaknesses of earnings per common share as a mea. sure of profitability. 4
Average total assets of this company in year 4 (520+650)/2 = 585,
Then ROA = 71.2/585 = 12.2%
Why add back interest income net of income tax savings in the numerator?
Outline of today’s lecture
1. Value of a firm to investors and creditors 2. Analysis of profitability: ROA 3. Analysis of profitability: ROCE 4. Analysis of profitability: EPS