财务管理基础 沈洪涛课件02

CHAPTER2

FinancialStatements,CashFlow,andTaxesBalancesheetIncomestatementStatementofcashflowsAccountingincomevs.cashflowMVAandEVAFederaltaxsystemTheAnnualReportBalancesheet–providesasnapshotofafirm’sfinancialpositionatonepointintime.Incomestatement–summarizesafirm’srevenuesandexpensesoveragivenperiodoftime.Statementofretainedearnings–showshowmuchofthefirm’searningswereretained,ratherthanpaidoutasdividends.Statementofcashflows–reportstheimpactofafirm’sactivitiesoncashflowsoveragivenperiodoftime.BalanceSheet:Assets

CashA/RInventories TotalCAGrossFALess:Dep. NetFATotalAssets20027,282632,1601,287,3601,926,8021,202,950263,160939,7902,866,592200157,600351,200715,2001,124,000491,000146,200344,8001,468,800Balancesheet:

LiabilitiesandEquity

Acctspayable NotespayableAccruals TotalCLLong-termdebtCommonstockRetainedearnings TotalEquityTotalL&E2002524,160636,808489,6001,650,568723,432460,00032,592492,5922,866,5922001145,600200,000136,000481,600323,432460,000203,768663,7681,468,800IncomestatementSales COGSOtherexpenses EBITDADepr.&Amort. EBITInterestExp.EBTTaxesNetincome20026,034,0005,528,000519,988(13,988)116,960(130,948)136,012(266,960)(106,784)(160,176)20013,432,0002,864,000358,672209,32818,900190,42843,828146,60058,64087,960OtherdataNo.ofsharesEPSDPSStockpriceLeasepmts2002100,000-$1.602$0.11$2.25$40,0002001100,000$0.88$0.22$8.50$40,000StatementofRetainedEarnings(2002)Balanceofretained earnings,12/31/01 Add:Netincome,2002 Less:DividendspaidBalanceofretained earnings,12/31/02$203,768(160,176)(11,000)$32,592StatementofCashFlows(2002)OPERATINGACTIVITIES NetincomeAdd(Sourcesofcash): Depreciation IncreaseinA/P IncreaseinaccrualsSubtract(Usesofcash): IncreaseinA/R IncreaseininventoriesNetcashprovidedbyops.(160,176)116,960378,560353,600(280,960)(572,160)(164,176)StatementofCashFlows(2002)L-TINVESTINGACTIVITIES InvestmentinfixedassetsFINANCINGACTIVITIES Increaseinnotespayable Increaseinlong-termdebt Paymentofcashdividend NetcashfromfinancingNETCHANGEINCASHPlus:CashatbeginningofyearCashatendofyear(711,950)436,808400,000(11,000)825,808(50,318)57,6007,282WhatcanyouconcludeaboutD’Leon’sfinancialconditionfromitsstatementofCFs?Netcashfromoperations=-$164,176,mainlybecauseofnegativeNI.Thefirmborrowed$825,808tomeetitscashrequirements.Evenafterborrowing,thecashaccountfellby$50,318.Didtheexpansioncreateadditionalnetoperatingaftertaxes(NOPAT)?NOPAT =EBIT(1–Taxrate)NOPAT02 =-$130,948(1–0.4) =-$130,948(0.6) =-$78,569NOPAT01

=$114,257Whateffectdidtheexpansionhaveonnetoperatingworkingcapital?NOWC=Current-Non-interest

assetsbearingCLNOWC02=($7,282+$632,160+$1,287,360) –($524,160+$489,600) =$913,042NOWC01=$842,400Whateffectdidtheexpansionhaveonoperatingcapital?Operatingcapital=NOWC+NetFixedAssetsOperatingCapital02=$913,042+$939,790 =$1,852,832OperatingCapital01=$1,187,200Whatisyourassessmentoftheexpansion’seffectonoperations?

SalesNOPATNOWCOperatingcapitalNetIncome 2002$6,034,000-$78,569$913,042$1,852,832-$160,1762001$3,432,000$114,257$842,400$1,187,200$87,960Whateffectdidtheexpansionhaveonnetcashflowandoperatingcashflow?NCF02=NI+Dep=($160,176)+$116,960 =-$43,216NCF01=$87,960+$18,900=$106,860OCF02=NOPAT+Dep =($78,569)+$116,960 =$38,391OCF01=$114,257+$18,900 =$133,157Whatwasthefreecashflow(FCF)for2002?FCF=OCF–Grosscapitalinvestment -OR-FCF02 =NOPAT–Netcapitalinvestment =-$78,569–($1,852,832-$1,187,200) =-$744,201Isnegativefreecashflowalwaysabadsign?EconomicValueAdded(EVA)EVA = After-tax __ After-tax OperatingIncome Capitalcosts =FundsAvailable__ Costof toInvestors CapitalUsed =NOPAT–After-taxCostofCapitalEVAConceptsInordertogeneratepositiveEVA,afirmhastomorethanjustcoveroperatingcosts.Itmustalsoprovideareturntothosewhohaveprovidedthefirmwithcapital.EVAtakesintoaccountthetotalcostofcapital,whichincludesthecostofequity.Whatisthefirm’sEVA?Assumethefirm’safter-taxpercentagecostofcapitalwas10%in2000and13%in2001.EVA02 =NOPAT–(A-Tcostofcapital)(Capital) =-$78,569–(0.13)($1,852,832) =-$78,569-$240,868 =-$319,437EVA01 =$114,257–(0.10)($1,187,200) =$114,257-$118,720 =-$4,463DidtheexpansionincreaseordecreaseMVA?MVA=Marketvalue__ Equitycapital ofequity suppliedDuringthelastyear,thestockpricehasdecreased73%.Asaconsequence,themarketvalueofequityhasdeclined,andthereforeMVAhasdeclined,aswell.DoesD’Leonpayitssuppliersontime?Probablynot.A/Pincreased260%,overthepastyear,whilesalesincreasedbyonly76%.Ifthiscontinues,suppliersmaycutoffD’Leon’stradecredit.DoesitappearthatD’Leon’ssalespriceexceedsitscostperunitsold?NO,thenegativeNOPATanddeclineincashpositionshowsthatD’Leonisspendingmoreonitsoperationsthanitistakingin.WhatifD’Leon’ssalesmanagerdecidedtooffer60-daycredittermstocustomers,ratherthan30-daycreditterms?Ifcompetitorsmatchterms,andsalesremainconstant…A/RwouldéCashwouldêIfcompetitorsdon’tmatch,andsalesdouble…Short-run:Inventoryandfixedassetsétomeetincreasedsales.A/Ré,Cashê.Companymayhavetoseekadditionalfinancing.Long-run:Collectionsincreaseandthecompany’scashpositionwouldimprove.HowdidD’Leonfinanceitsexpansion?D’Leonfinanceditsexpansionwithexternalcapital.D’Leonissuedlong-termdebtwhichreduceditsfinancialstrengthandflexibility.WouldD’Leonhaverequiredexternalcapitaliftheyhadbrokenevenin2001(NetIncome=0)?YES,thecompanywouldstillhavetofinanceitsincreaseinassets.LookingtotheStatementofCashFlows,weseethatthefirmmadeaninvestmentof$711,950innetfixedassets.Therefore,theywouldhaveneededtoraiseadditionalfunds.WhathappensifD’Leondepreciatesfixedassetsover7years(asopposedtothecurrent10years)?Noeffectonphysicalassets.Fixedassetsonthebalancesheetwoulddecline.Netincomewoulddecline.Taxpaymentswoulddecline.Cashpositionwouldimprove.FederalIncomeTaxSystemCorporateandPersonalTaxesBothhaveaprogressivestructure(thehighertheincome,thehigherthemarginaltaxrate).CorporationsRatesbeginat15%andriseto35%forcorporationswithincomeover$10million.Alsosubjecttostatetax(around5%).IndividualsRatesbeginat10%andriseto38.6%forindividualswithincomeover$307,050.Maybesubjecttostatetax.TaxtreatmentofvarioususesandsourcesoffundsInterestpaid–taxdeductibleforcorporations(paidoutofpre-taxincome),butusuallynotforindividuals(interestonhomeloansbeingtheexception).Interestearned–usuallyfullytaxa