in-现金流分析框架

1、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.,6,CU7010598KRA,Cash Flow,Earnings vs. Cash Flow*,Some accounting decisions impact earnings, but not cash In 19

2、88, General Motors made at least four decisions that impacted earnings but not cash,Earnings do not equal cash flow.,*Earnings are also called after tax profits or net income,Successful high growth companies tend to have high earnings, but low cash flow; successful low growth companies tend to have

3、low earnings, but high cash flow,Earnings Impact,$790MM,$480MM,$217MM,$270MM,Cash Impact,None,None,None,None,Total:,$1,757MM,None,7,CU7010598KRA,Cash Flow,Agenda,The importance of cash flow Types of cash flow Applications Cash flow steps Exercise Key takeaways,8,CU7010598KRA,Cash Flow,Types of Cash

4、Flow,Net cash flow is equal to the sum of the cash flows from operating, investing, and financing activities.,Operating cash flow,Investing cash flow,Financing cash flow,Ability of a companys recurring operations to generate cash,Ability of a companys investment decisions to generate cash,How a comp

5、any 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:,9,CU7010598KRA,Cash Flow,Opera

6、ting Cash Flow,*Investing activities not related to ongoing operations (such as the purchase or sale of divisions or companies, or investments in unrelated businesses) are not included in investing cash flow. They are included in financing cash flow.,Operating cash flow excludes all cash flows relat

7、ed 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

8、cash flows are used, not financing cash flow,Bain is usually more interested in operating and investing* cash flow than in financing cash flow,Operating cash flow measures the ability of a businesss recurring operations to generate cash.,10,CU7010598KRA,Cash Flow,Investing Cash Flow,Investments in o

9、ngoing 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

10、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

11、 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 evalua

12、te the financial strategy of the business,Investing cash flow measures the use of a businesss cash for the acquisition of non-current assets.,11,CU7010598KRA,Cash Flow,Financing Cash Flow,Major types of financing cash flow include: debt-related transactions changes in long-term debt interest income

13、and expense equity-related transactions changes in common and preferred stock dividends short-term investments long-term asset and liability transactions purchase or sale of a division or company changes in long-term liabilities,Financing cash flow captures all the non-operating cash changes experie

14、nced during the year, and it provides information on how a company is funding its operations.,12,CU7010598KRA,Cash Flow,Statement of Cash Flows,The SCF is divided into three sections: operating, investing, and financing Each section shows sources and uses of funds for the accounting period The SCF s

15、hows the amounts for depreciation and amortization capital expenditures taxes paid dividends paid It does not show sources and uses by business unit It does not provide much detail for example, it does not show capital expenditures by project, nor individual equipment purchases,The SCF is not a subs

16、titute for cash flow analysis,The statement of cash flows (SCF) found in annual reports is a good source of data for constructing cash flows, but sometimes it does not have the detail required for the analysis being done.,13,CU7010598KRA,Cash Flow,Agenda,The importance of cash flow Types of cash flo

17、w Applications Cash flow steps Exercise Key takeaways,14,CU7010598KRA,Cash Flow,Applications,Bain case teams use cash flow (CF) analysis to value investments/acquisitions, to improve the health of business units, and to help companies manage their portfolios.,Valuation (mergers, acquisitions),Busine

18、ss unit analysis,Portfolio 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

19、 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 denominator,CF = me

20、asuring stick,CF = portfolio tool,15,CU7010598KRA,Cash Flow,Agenda,The importance of cash flow Types of cash flow Applications Cash flow steps Exercise Key takeaways,16,CU7010598KRA,Cash Flow,Cash Flow Cookbook,*Cash is defined as cash plus marketable securities minus short-term notes *I/S = income

21、statement, SCF = statement of cash flows, B/S = balance sheet,+ +/ - +/ - - +/ - =,1.Profit before interest and tax (PBIT) 2.Depreciation 3.Other non-cash expenses/income 4.Decrease/increase in working capital (excluding cash) 5.Taxes paid 6.Tax impact of interest income/expense Operating cash flow,

22、Bain case teams use the following cash flow cookbook:,- =,7.Capital expenditures Investing cash flow,+/ - +/ - +/ - +/ - - +/ - =,8.Interest income/expense 9.Tax impact of interest expense/income 10.Increase/decrease in long-term debt 11.Increase in outstanding stocks/shares 12.Dividends 13.Changes

23、in other accounts Financing cash flow,14.Reconcile with change in cash* from Balance Sheet,Net cash flow,Source*,I/S,SCF, B/S and Notes,Notes,B/S,I/S, B/S,I/S,SCF, B/S and Notes,I/S,I/S,B/S,B/S,SCF, B/S, and Notes,B/S, I/S,B/S,17,CU7010598KRA,Cash Flow,Agenda,The importance of cash flow Types of cas

24、h flow Applications Cash flow steps Exercise Key takeaways,18,CU7010598KRA,Cash Flow,Exercise - Background (p. 1),*This exercise is based on The Gillette Companys financial statements in 1996. Since several modifications have been made to the financial statements, the information provided hereafter

25、should not be used to analyze Gillettes financial performance.,Net Sales,Cost of Sales,Gross Profit,SG 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 ign

26、ore changes in deferred taxes; their cash impact has been addressed by the “taxes paid” item in operating cash flow,58,CU7010598KRA,Cash Flow,Step 13 - Changes in Other Accounts - Answer,Other long-term liabilities:,1995 ($MM),$635.1,1996 ($MM),$630.2,Change,Decrease,Impact on Cash Flow,Decrease,Res

27、ult ($MM),($4.9),A decrease in other long-term liabilities decreases financing cash flow.,59,CU7010598KRA,Cash Flow,Financing Cash Flow Calculation,- + + + - -,Interest expense Tax impact of interest expense Increase in long-term debt Increase in outstanding stocks and shares Dividends Decrease in o

28、ther long-term liabilities Financing cash flow,$42.1MM,$430.0MM,$126.1MM,($450.8)MM,$31.2,($111.3)MM,($4.9)MM,Financing is a source of $31.2MM in cash for The New England Razor Company.,60,CU7010598KRA,Cash Flow,Cash Flow Summary,1. Profit Before Interest and Taxes (PBIT),2. + Depreciation,3. + Othe

29、r non-cash expenses,4. - Increase in working capital,5. - Taxes paid,6. - Tax impact of interest expense,7. - Capital expenditures,8. - Interest expense,9. + Tax impact of interest expense,10. + Increase in long-term debt,11. + Increase in outstanding stocks and shares,12. - Dividends,13. - Decrease

30、 in other long-term liabilities,14. Change in cash,$1,636.3MM,$381.1MM,$22.0MM,($175.2)MM,($714.1)MM,($42.1)MM,($1,138.5)MM,($111.3)MM,$42.1MM,$430.0MM,$126.1MM,($450.8)MM,($4.9)MM,$31.2MM,$1,108.0MM,$0.7MM,Operating cash flow,Financing cash flow,The New England Razor Company has a net change in cas

31、h of $0.7MM.,($1,138.5)MM,Investing cash flow,61,CU7010598KRA,Cash Flow,Step 14 - Cash Reconciliation,Balance Sheet,Where to find:,Process:,The cash flow should reconcile with the change in cash and cash equivalents on the balance sheet.,Change in cash + Change in marketable securities = Change in c

32、ash,Comment:,Cash equivalents are combined with cash togive an accurate picture of cash position,62,CU7010598KRA,Cash Flow,Step 14 - Cash Reconciliation - Answer,Cash:,Marketable Securities:,1996 ($MM),1995 ($MM),Change ($MM),$76.9,$7.0,$81.6,$1.6,($4.7),$5.4,Change in cash position,$0.7MM,The Balan

33、ce Sheet for the New England Razor Company shows a net change in cash of $0.7MM.,63,CU7010598KRA,Cash Flow,Agenda,The importance of cash flow Types of cash flow Applications Cash flow steps Exercise Key takeaways,64,CU7010598KRA,Cash Flow,Key Takeaways,“Cash is King” cash flow is a very useful measu

34、re of a companys performance earnings can be very different from cash flow,Operating cash flow + investing cash flow + financing cash flow = net cash flow,The major components of operating cash flow are: profit before income and tax non-cash expenses/income (mainly depreciation) change in non-cash w

35、orking capital,The major component of investing cash flow is: capital expenditures,The major components of financing cash flow are: debt-related transactions equity-related transactions long-term asset and liability transactions,Financial statements often have some unusual features, but 95% of the c

36、ash flow can usually be understood by looking at the items listed above,The value of cash flow analysis is in understanding the components or drivers of cash flow,65,CU7010598KRA,Takeaway Slides (p. 1),Cash Flow,Cash is King,Cash Flow Cookbook,+ +/ - +/ - - +/ -,1.Profit before interest and tax (PBI

37、T) 2.Depreciation 3.Other non-cash expenses/income 4.Decrease/increase in working capital (excluding cash) 5.Taxes paid 6.Tax impact of interest income/expense,- =,7.Capital expenditures Investing cash flow,+/ - +/ - +/ - +/ - - +/ -,8.Interest income/expense 9.Tax impact of interest expense/income

38、10.Increase/decrease in long-term debt 11.Increase in outstanding stocks/shares 12.Dividends 13.Changes in other accounts,Net cash flow,Source,I/S,SCF, B/S and Notes,Notes,B/S,I/S, B/S,I/S,I/S,I/S,B/S,B/S,B/S, I/S,B/S,14.Reconcile with change in cash from Balance Sheet6,Balance Sheet,Where to find:,

39、Process:,Change in cash + Change in marketable securities = Change in cash,Comment:,Cash equivalents are combined with cash to give an accurate picture of cash position,Cash Position,Applications,SCF, B/S and Notes,SCF, B/S and Notes,Operating cash flow,Financing cash flow,=,=,66,CU7010598KRA,Takeaw

40、ay Slides (p. 2),Cash Flow,Types of Cash Flow,Operating Cash Flow,Investing Cash Flow,Financing Cash Flow,Operating cash flow,Investing cash flow,Financing cash flow,Ability of a companys recurring operations to generate cash,Ability of a companys investment decisions to generate cash,How a company

41、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

42、- 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 ass