mba财政会计实务英文版(ppt 37).ppt

MBA财政会计实务英文版(ppt 37)
The value of a firm to equity investors
V = D1/(1+r) + D2/(1+r)2 + D3/(1+r)3 …….
profitability
risk
Financial Statement Analysis
the relation between the expected return and 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.
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 measure of profitability.
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)
4. The average ratio for other firms in the same industry (cross-section analysis)
Analysis of Profitability
Return on assets (ROA): return to the firm as a whole
Return on common equity (ROCE): return to common shareholders only
Earnings per common share
Analysis of Profitability
ROA: return to the firm
ROCE: return to
common
Shareholders only
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
Horrigan Corporation
Year 4
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
26
Next Income
60
Horrigan Corporation-assuming no debts
Year 4
Sales Revenue
$ 475
Less expense:
COGS
280
Selling
53
Administrative
22
Depreciation
18
Interest
16 - 16
Total
389 - 16 = 373
Next income before tax
86 + 16 = 102
Less Income tax expense
26 +