Académique Documents
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Statement
Analysis
K R Subramanyam
John J Wild
McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
9-2
Prospective Analysis
9
CHAPTER
9-3
Prospective Analysis
Importance
Security
SecurityValuation
Valuation --free
freecash
cashflow
flowand
andresidual
residual
income
incomemodels
models require
requireestimates
estimates of
offuture
futurefinancial
financial
statements.
statements.
Management
ManagementAssessment
Assessment -- forecasts
forecastsof
of financial
financial
performance
performanceexamine
examinethe
theviability
viabilityofofcompanies’
companies’
strategic
strategicplans.
plans.
Assessment
Assessmentof ofSolvency
Solvency -- useful
usefulto
tocreditors
creditorsto
to
assess
assessaacompany’s
company’sability
abilityto
tomeet
meetdebt
debt service
service
requirements,
requirements,both
bothshort-term
short-termand
andlong-term.
long-term.
9-4
2)
2)Expected
Expectedlevel
levelof
ofmacroeconomic
macroeconomicactivity
activity
3)
3)The
Thecompetitive
competitive landscape
landscape
4)
4)New
Newversus
versusold
old store
storemix
mix(strategic
(strategic
initiatives)
initiatives)
9-5
Steps:
6. Assume initial long-term debt balance is equal to the prior
period long-term debt less current maturities from Step 4.
7. Assume other long-term obligations are equal to the prior
year’s balance unless they have exhibited noticeable trends.
8. Assume initial estimate of common stock is equal to the prior
year’s balance
9. Assume retained earnings are equal to the prior year’s
balance plus (minus) net profit (loss) and less expected
dividends.
10. Assume other equity accounts are equal to the prior year’s
balance unless they have exhibited noticeable trends.
9-11
Selected Ratios
Accounts receivable turnover rate.................................... 9.240 9.094 6.722
Inventory turnover rate.....................................................5.840 6.266 5.357
Accounts payable turnover rate ....................................... 5.441 5.728 5.444
Accrued expenses turnover rate ....................................... 28.683 32.628 24.214
Taxes payable/Tax expense...............................................
26.527% 122.663% 37.485%
Dividends per share .........................................................
$ 0.310 $ 0.260 $ 0.240
Capital expenditures (CAPEX)—in millions ...................... 3,012 2,671 3,189
CAPEX/Sales ....................................................................
6.431% 6.356% 8.524%
9-12
•• Examine
Examine the
the influential
influential variables
variables closely
closely
•• Prepare
Prepare expected,
expected, optimistic,
optimistic, and
and pessimistic
pessimistic
scenarios
scenarios to
to develop
develop aa range
range of
of possible
possible
outcomes
outcomes
9-17
The
Theresidual
residualincome
incomevaluation
valuationmodel
modeldefines
definesequity
equityvalue
value
at
attime
timettas
asthe
thesum
sumof
ofcurrent
currentbook
bookvalue
valueand
andthe
thepresent
present
value
valueofofall
allfuture
futureexpected
expectedresidual
residualincome:
income:
where
whereBV BVt tisisbook
bookvaluevalueatatthetheend
endof ofperiod
periodt,t,RI
RIt +t +nnisisresidual
residualincome
incomeinin
period
periodt t++n,n,and
andkkisiscost
costofofcapital
capital. .Residual
Residualincome
incomeatattime timet tisisdefined
defined
as
ascomprehensive
comprehensivenet netincome
incomeminus minusaacharge
chargeon onbeginning
beginningbookbookvalue,
value,
that
thatis,
is,RI
RIt ==NINIt --(k(kxxBV
BVt - 1).).
t t t-1
9-18
In
In its
its simplest
simplest form,
form, we
we can
can perform
perform aa
valuation
valuation byby projecting
projecting the
the following
following
parameters:
parameters:
-Sales
-Salesgrowth.
growth.
-Net
-Netprofit
profit margin
margin(Net
(Netincome/Sales).
income/Sales).
-Net
-Networking
workingcapital
capitalturnover
turnover (Sales/Net
(Sales/Net WC).
WC).
-Fixed-asset
-Fixed-assetturnover
turnover (Sales/Fixed
(Sales/Fixedassets).
assets).
-Financial
-Financialleverage
leverage(Operating
(Operatingassets/Equity).
assets/Equity).
-Cost
-Cost of
ofequity
equitycapital
capital
9-19
9-20
The
TheResidual
ResidualIncome Income valuation
valuationmodel
modeldefines
definesresidual
residual
income
incomeas: as:
RI
RIt t ==NI
NIt t ––(k
(k xx BV
BVt-1t-1))
==(ROE
(ROEt t––k)
k) xx BV
BVt-1t-1
Where
WhereROE
ROE == NI/BV
NI/BVt-1t-1
--Stock
Stock price
priceisis only
onlyimpacted
impactedso solong
longas
asROE ≠ kk
ROE ≠
--Shareholder
Shareholdervalue
valueisiscreated
createdso
solong
longas
asROE
ROE >> kk
9-21
Reversion of ROE
9-23