英国布里斯托大学财务分析课程

FinancialStatementAnalysisandValuation-Lecturesandtutorials-Lecturesprovideaframeworkfororganisingideas.-Additionalreadingnecessary!-Ryanaircase:goodpreparationforthecoursework-Exercises:Foryourownwork-Tutorials:goodpreparationfortheexam-CourseworkNikola.Petrovicbristol.ac.ukThursday,13-14.00Friday,11.30-12.301B14,Week12AFrameworkforFundamentalAnalysisBusinessAnalysis,Businessactivitiesandcapitalmarkets,Operatingactivities,Financingactivities,Investingactivities,Thefirm:Thevaluegenerator,TheInvestors:Theclaimantsonvalue,Debtholders,Shareholders,SecondaryDebtholders,SecondaryShareholders,Cashfromloans,Cashfromshareissues,Dividendsandcashfromsharerepurchases,Interestandloanpayments,Cashfromsaleofdebt,Cashfromsaleofshares,TheCapitalMarket:Tradingvalue,Source:Penman,p.8,Whatarewedoing?,Financialanalystsare:informationintermediaries;theydigestinformationandprovidesummaryinformationtothepublic/lesssophisticatedinvestors.especiallyimportantwherecapitalmarketsarewelldeveloped.Theyaredoing:Fundamentalanalysis:contextualanalysisofallpubliclyavailableinformationinordertovaluethecompany.Technicalanalysis:spottingsharepricetime-seriespatternsinordertopredictmovementofprices.,Whatarewedoing?,Partoffundamentalanalysis:Financialstatementanalysisandvaluationofsharessoastogivewellinformedinvestmentadvicetoanequityinvestor.Similartowhatsell-sideequitywithinbrokeragehousesaredoing(asopposedtobuy-sideanalystsaffiliatedwithinstitutionalinvestors)Finalproduct:equityresearchreportNoteofcautioninregardoffinancialstatementanalysis:Financialstatementanalysiscanbedoneforvariouspurposes:creditanalysis,competitivebenchmarking,analysisofmergersandacquisitions,etc.DifferentpurposesrequiredifferentapproachtoanalysisFocusofthiscourse:analysisoffinancialperformanceandfinancialpositioninordertoforecastfuturepayoffstoequityholders,Whyarewedoingit?,Socialwelfare:Theactivityofanalystsmakemarketsefficient.Therefore,contributiontoefficientallocationofresources.Personalgains:Ifmarketsarenotefficient,theproperanalysishelpsinidentifyingmispricedcompanies.1980s:marketefficiencyparadigmwidelyacceptedpassiveinvestmentEvidenceofmarketinefficiencyactiveinvestmentandarenewedinterestinfundamentalanalysis(WarrenBuffet)Fundamentalanalysis:anchoringonreliableinformation(accounting)ratherthanrumoursandspeculations;long-termperspectiveasopposedtoshort-termgain,Dot-combubble:Dellillustration,Late1990s:unlimitedfaithinprospectofnewtechnologyandinternetfirms;bubbleburstin2001Forthey/e2000Dellhadreportedearningsof$1.7billiononsalesof$25.3billion.TheMVofDellssharesatthetimewas$146.4billion3*theMVofGMCandFordMotorCompanycombined(P/E8.5/5.0respectively)DellssharestradedataP/Eof87.9!DespitehealthytradingandforecastedgrowthDellsstockappearedover-valued.In2000thepersharestockpricefellfrom$58inearly2000to$29in2003.Thepricehadonlyrecoveredto$40in2005.,Dot-combubble:Whatweretheanalystsdoing?,Theywereridingthewave:involvedinshort-termspeculationofthemarketmoodratherthanprovidingmoresoberpicturetotheirclientsbasedonfundamentalsofthecompanies.AnalysisbasedoninternetclicksthatdonotgenerateanyincomeConflictofinterest:Manybrokeragehousesaffiliatedwithinvestmentbanks:thebetterpictureofbusiness,morelucrativebusinessiscreatedforthebanks(SEOs,mergers,etc.),Dot-combubble:Theroleoffinancialstatements,TheroleofF/Sisto“anchortheinvestorontherisingtideofspeculation”withhardinformationEarningsdidmatter!LossesreportedbyneweconomyfirmsduringthebubbleturnedouttobeagoodpredictoroffailureSurvivingfirmsreportedearningsturnedouttobeabetterindicatoroffutureperformanceMostoftheintangibleassetsdisappearedThemuch-criticisedSoFP(B/S)alsoprovidedgoodforecasts.Theratioofdebtassumedtopursueintangibleswaslargerelativetotangibleassetsandthatratiopredictsimpendingfailure,Processoffundamentalanalysis,Businessanalysis,Tradingonthevaluation,Accountinganalysis,Financialanalysis,Forecasting,Valuation,UnderstandingthePast,Processoffundamentalanalysis,BusinessanalysisEconomicfactorsIndustrystructureCompetitivestrategyCorporatestrategyAccountinganalysisEvaluationoftheextenttowhichafirmsaccountingcapturestheunderlyingbusinessrealityUnderstandingaccountingdistortionsFinancialanalysisAnalysisoffinancialperformanceandfinancialpositionusingratioandcashflowanalysis,Processoffundamentalanalysis,ForecastingthefutureForecastingofpayoffsthroughforecastsofbalancesheet,incomestatementandcashflowsValuationConvertingforecastintheestimatesofequityvaluebyusingsomeoftheavailablevaluationmodelsTradingonthevaluationInvestmentrecommendation:hold,buyorsell,Processoffundamentalanalysis,FinancialStatementsYear1,Currentfinancialstatements,Otherinformation,Valuationofequity,FinancialStatementsYear2,FinancialStatementsYear3,Forecasts,Convertforecaststovaluation,Valuation,Value=PresentvalueoffuturepayoffsDepositaccount,Loan,Bond=PVoffutureinterestreceivable+principalInvestmentproject=PVoffuturenetcashflowsfromtheprojectCalloption=PVoffutureexpecteddifferencebetweensharepriceandstrikepriceHouse=PVoffuturerentsEquity=PVoffuturepayoffstoshareholdersValueofthefirm=Valueofdebt+ValueofequityNote:ValuationAssetpricingValuationisaboutcurrentvalueofvariousclassesofassetsAssetpricingisaboutdeterminingreturnstovariousclassesofassets,Whatgeneratesvaluetoshareholders?,Valueofthefirm=Valueofdebt+ValueofequityValueoftheoperationsandinvestment=Valueofdebt+ValueofequityMiller-Modigliani:CapitalstructureirrelevanceDividendpayoutirrelevanceInperfectandefficientcapitalmarkets,thevalueisgeneratedonlyinoperatingactivities.,Businessanalysis,Economicenvironment,Industry,Firm,Economicfactors,GDPforecastsMaximumrateatwhichbusinesscangrowinthelongrunInterestratesEffectoncostsofborrowingEffectofCHANGESininterestratesconsumptionvssavingdecision:lowerinterestrates,moreconsumption,highersalesInflationAffectsallocationofcapital(capitalescapestocountrieswithlowerinflationorinvestmentincommoditiesorrealassets),Economicfactors,ForeignexchangeratesImportantforcompaniesexposedtoforeignmarkets(input,outputorinvestment)OilandothercommoditypricesKeyinputstomanybusinessesLookforthecompanyshedging,riskmanagementpoliciesanduseofderivativesBusinesscycleSensitivityofprofitabilitytobusinesscyclevariesacrossindustries,Sensitivityofsectorprofitabilitytokeymacroeconomicfactors,Industryanalysis,Understandindustryoperationssupply,production,distributionandmarketingprocesses,technology,natureoftheproductEffectofindustrystructureontheprofitabilityPortersfiveforcesanalysisIntensityofcompetitiondeterminesthepotentialforcreatingabnormalprofitsWhetherabnormalprofitsarekeptbytheindustryisdeterminedbytherelativebargainingpowerofthefirmsintheindustryandtheircustomersandsuppliers,Porters5forcesanalysis,Industryprofitability,Bargainingpowerofbuyers,Threatofsubstituteproducts,Threatofnewentrants,Rivalryamongexistingfirms,Bargainingpowerofsuppliers,Degreeofactualandpotentialcompetition,Bargainingpowerininputandoutputmarkets,Competitivestrat