本学期资料 财务报表 Chpter Notes Chp011

1、The Analysis of the Cash Flow Statement,Chapter 11,11-2,The Analysis of Cash Flow Statement,Link to Previous Chapter,This chapter reformulates the,cash flow statement to capture,the operating and financing,activities.,This Chapter,Chapter 12 lays out the,analysis of the reformulated,financial statem

2、ents.,Link to Next Chapter,Link to Web Page,How is the cash,flow statement,reformulated to,separate,operating and,financing,flows?,How is free cash,flow identified,in reformulated,statements ?,What,adjustments,must be made,to GAAP,cash flow,statements ?,Chapter 10 reformulated the,balance sheet and

3、income,statement to capture the operating,and financing activities.,More on the statement of cash flows,11-3,What You Will Learn from this Chapter,How free cash flow can be calculated from reformulated income statements and balance sheets (without a cash flow statement) How the cash conservation equ

4、ation ties the cash flow statement together to equate free cash flow and financing cash flow The difference between the direct and indirect calculations of cash from operations Problems that arise in analyzing cash flows from GAAP statements of cash flow What reformulated cash flow statements tell y

5、ou How to examine the quality of reported cash flow from operations,11-4,The Big Picture for this Chapter,Once again, appropriate analysis distinguishes operating activities from financing activities - free cash flow is the free cash flow from operating activities: the generation of cash flow - cash

6、 flows to shareholders and net debtholders are financing activities: the disposition of cash flow GAAP and IFRS confuse the two,11-5,The Calculation of Free Cash Flow,Three methods to calculate FCF: 1. Use the sources of cash flow equation: that is, free cash flow is operating income adjusted for th

7、e change in net operating assets 2. Use the disposition of cash flows equation: that is, free cash flow is net financial expenses, adjusted for the change in net financial obligations, plus dividends to common shareholders. 3. FCF can also be obtained from the reformulated Statement of Cash Flows.,C

8、alculation of Free Cash Flow: Nike, Inc.: 2010,11-6,11-7,The Standard GAAP Statement of Cash Flows,11-8,Nike, Inc. Statement of Cash Flows, 2010,11-9,Indirect Method for Cash Flow from Operations,Net income + Accruals = Cash from operations Nikes statement (to follow) employs the indirect method (as

9、 do almost all firms): 2010 Net income $1,906.7 million Accruals 1,257.5 Cash provided by operations $3,164.2,Direct Method for Cash from Operations,Cash inflows Cash outflows = Cash from operations _,11-10,11-11,Problems with the Standard Statement,1. Change in operating cash should be included in

10、the investment section, and the change in cash equivalents in the financing section 2. Transactions in financial assets are included in the investments section rather than in the financing section 3. Interest payments and receipts are included in the operating rather than in the financing section 4.

11、 Tax cash flows are all included in the operating section, and not allocated to operating and financing 5. The statement does not incorporate non-cash transactions,11-12,1. Operating Cash and Cash in Financial Assets: Nike,Change in cash and cash equivalents $788.0 million Increase in operating cash

12、 $ 0.8 Increase in financial assets 787.2 $788.0 million The determination of operating cash: use a normal percentage of sales for the industry (1/2% of sales?) See Nikes reformulated balance sheet in Exhibit 10.3 in chapter 10.,11-13,2. Transactions in Financial Assets: Lucent Technologies,11-14,3.

13、 Net Interest Receipts 4. Taxes on Net Interest Receipts: Nike,In millions Interest receipts $42.1 Interest payments (48.4) Net interest payments before tax 6.3 Tax (at 36.3%) 2.3 Net interest receipts after tax $ 4.0 Add back to GAAP Cash from Operations,11-15,5. Non-cash Transactions,Acquisitions

14、with shares Asset exchanges Assets acquired with debt Capitalized leases Installment purchases Debt converted to equity,Reformulated Statement of Cash Flows,This format follows the cash conservation equation: C I = d + F,11-16,11-17,The Reformulated Statement of Cash Flows: the Adjustments,Nike, Inc

15、.: Reformulated Statement of Cash Flows,11-18,11-19,Why Free Cash Flow from Adjusted Cash Flow Statements May not Reconcile to the Methods 1 and 2,“Other assets” and “other liabilities” are not identified as either operating or financing Cash dividends in the cash flow statement differ from dividend

16、s in the equity statement Cash from share issues in the cash flow statement may differ from share issues in the equity statement Details for adjustments 3,4 and 5 are not available GAAPs treatment of employee stock options (Chapter 9) Cash flow numbers of foreign subsidiaries are translated at avera

17、ge exchange rates whereas balance sheet numbers are translated at end-of-year exchange rates,11-20,The Calculation of Cash Flow from Operations,The practical matter of distinguishing cash flow from operations from cash flow from investment activities is not an easy one: the cash flow from operations

18、 in the GAAP statement is not a clean measure. Some cash flows from investment activities are classified as cash flows from operations R&D expenditures Investment in inventories Taxes on gains from assets sales are classified as cash flow from operations Note, however, that for a calculation of FCF (C I), a