财务分析-cashflow.ppt

Author: Collins Qian Contributor: Chris Nelson bc Cash Flow March 1998 Copyright 1998 Bain CASH is harder to manipulate Cash is King! Cash flow is the measure of a companys strategic value. 5CU7010598KRA bc BOS Copyright 1998 Bain successful low growth companies tend to have low earnings, but high cash flow Accounting Decision Extended useful plant life from 35 to 45 year schedule Changed the way it accounted for its pension plan Adjusted its inventory valuation policy Changed the residual value assumption for cars it leased Earnings Impact $790MM $480MM $217MM $270MM Cash Impact None None None None Total:$1,757MMNone 6CU7010598KRA bc BOS Copyright 1998 Bain add changes in their balance to financing cash flow ignore changes in PPE; their cash impact has been addressed through the “capital expenditure” and “depreciation” items in operating cash flow ignore changes in deferred taxes; their cash impact has been addressed by the “taxes paid” item in operating cash flow 57CU7010598KRA bc BOS Copyright 1998 Bain CASH is harder to manipulate Cash is King! Valuation (mergers, acquisitions) Business unit analysisPortfolio management What is the cash generation potential of an investment/ acquisition? What are we willing to pay (in cash) for that investment/acquisition? How healthy is a business unit? What factors have effected the business units ability to generate cash/value over time? How can the business units cash management be improved? What is the overall balance of cash users/cash generators in a clients portfolio of businesses? How does this effect the clients overall cash position/outlook? What restructuring can be done to improve this profile? CF = common denominatorCF = measuring stickCF = portfolio tool SCF, B/S and Notes SCF, B/S and Notes Operating cash flow Financing cash flow = = 65CU7010598KRA bc BOS Copyright 1998 Bain & Company, Inc. Takeaway Slides (p. 2) Cash Flow Types of Cash FlowOperating Cash Flow Investing Cash FlowFinancing Cash Flow Operating cash flowInvesting cash flowFinancing cash flow Ability of a companys recurring operations to generate cash Ability of a companys investment decisions to generate cash How a company funds its operations Operating profits Decrease in working capital Sale of fixed assets Long-term issuance of shares Examples of sources: Operating losses Increase in working capital Purchase of fixed assets Repayment of loans Payment of dividends Examples of uses: Investments in ongoing operations - property, plant and equipment - are included in investing cash flow cash is used to replace assets as they wear out if a business is to grow, additional assets must be acquired in some cases, the cash used to acquire these assets is generated from the sale of existing noncurrent assets such cash inflows, however, seldom cover the entire cost of asset acquisitions. Often times, cash flow from operations is used to finance acquisitions, or, failing a positive operating cash flow, external financing is used Pure financing activities are not included in investing cash flow. They are included in financing cash flow purchase or sale of divisions or companies investments in unrelated businesses Investing cash flows relating to ongoing operations are used as a measure of the strategic value of a business. Those that are purely financing/investment mechanisms are used to evaluate the financial strategy of the business Operating cash flow excludes all cash flows related to a firms capital structure cash generation ability is independent of how a firm is financed It excludes one-time events these are not related to a firms recurring operations Operating cash flow is used to measure the strategic value of a business for company valuations, operating and investing cash flows are used, not financing cash flow Bain is usually more interested in operating and investing cash flow than in financing cash flow Major types of financing cash flow include: debt-related transactions 8 changes in long-term debt 8 interest income and expense equity-related transactions