英国名校布里斯托大学财务分析和证券估值课程3

Financing versus operating
• Operating assets and liabilities generate operating income • Financing assets and liabilities are those that produce financial income or incur financial expenses.
Week 14 Accounting Analysis
Process of fundamental analysis
Business analysis
Understanding the Past
Accounting analysis
Financial analysis
Forecasting
Valuation
– E.g. banks: hold mainly financial assets and financial liabilities in the form of customer deposits, bonds and loans. But they make money from the spread between the interest they pay on their liabilities and the interest they earn on their financial assets. These apparent financial assets and liabilities are actually operating assets and liabilities.
• Reformulated statements ready for subsequent financial analysis and valuation because give the detail to discover the sources of: – Profitability (ROE) – Growth
OI sometimes referred to as NOPAT (Net operating profit after tax
Reformulated Statement of Comprehensive Income
• Separate operating and financing items – Follow the classification in SoFP – Problems: foreign currency gains and losses • Separate tax effect on operating and financing items – Interest recognised as an expense, therefore not taxed – Therefore, it attracts tax benefit tax shield = NFE x Tax rate – We want to know what is the operating result irrespective of capital structure: Tax on OI = Tax expense as reported + Tax benefit of debt – Use statutory tax rate
Shareholders
Operating and investing activities
Financing activities
Financing versus operating
– Financing assets and liabilities are those that are involved in raising cash for operations and disbursing excess cash from operations – Operating assets and liabilities are those involved in the business as a result of cash investment, in selling goods and services. – For the purposes of the income statement we need to keep in mind a parallel classification system
PPE + Inventories+ Trade receivablesTrade payables
Borrowings and interest
Debtholders
Cash and borrowings
Suppliers
Expenses
Cash investments
Net share issuance and dividends
Representation ofial statements
Product and Input Markets The Firm Capital Markets
Cash from operations
Customers
Revenues
Net asset used in operating activities
Reformulated Statement of Comprehensive Income - Illustration
IFRS Income Statement
Reformulated Statement of Financial Position
• The standard SoFP splits between assets and liabilities – Assets based on liquidity (current and long-term) – Liabilities based on maturity (current and long-term) • Useful for credit analysis, but not for valuation • To understand a firm‟s ability to generate profits the SoFP is reformulated into operating and financing assets and liabilities – When reformulating into operating and financing assets/liabilities keep in mind the question: • what business is the firm in?
Reformulated Statement of Financial Position
Operating assets (OA) Operating liabilities (OL) Net operating assets (NOA) Financial assets (FA) Financial liabilities (FL) Net financial obligations (NFO) Ordinary shareholders equity (OSE = NOA – NFO)
Reformulated Statement of Comprehensive Income
Operating revenues Operating expenses Core operating income (before tax) Reported tax Tax benefit of debt Tax on operating income Core operating income (after tax) Other (unusual) operating income Operating income after tax (OI) Net interest expense before tax Tax benefit of debt Net financial expense (NFE) Comprehensive income (CI = OI – NFE) XXX (XXX) XXX (XXX) (XXX) (XXX) XXX XXX XXX (XXX) XXX (XXX) XXX
Trading on the valuation
Reformulation
• Operating activities create value (MM proposition)
• Therefore, separate operating from financing items in: – Statement of financial position – Statement of comprehensive income – Statement of cash flows
Reformulated Statement of Financial Position
Liabilities and OSE
• Financial liabilities – Short-term borrowings – Current maturities of long-term debt – Short-term notes payable – Long-term borrowing (bank loans, bonds, loan stock) – Lease obligations – Preference shares • Operating assets – Everything else • Ordinary shares • Derivatives: Look at their function
Reformulated Statement of Comprehensive Income