INVESTMENTS 投资学 （博迪BODIE, KANE, MARCUS）Chap019 Financial Statement Analysis.ppt

CHAPTER 19 Financial Statement Analysis INVESTMENTS | BODIE, KANE, MARCUS INVESTMENTS | BODIE, KANE, MARCUS Copyright ? 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin * Financial statement analysis can be used to discover mispriced securities. Financial accounting data are widely available, but Accounting earnings and economic earnings are not always the same thing! Financial Statement Analysis * Income Statement: Profitability over time Balance Sheet: Financial condition at a point in time Statement of Cash Flows: Tracks the cash implications of transactions. Financial Statements * Table 19.1 Consolidated Statement of Income for Hewlett-Packard, 2009 * Table 19.2 Consolidated Balance Sheet for Hewlett-Packard, 2009 * Table 19.3 Statement of Cash Flows for Hewlett-Packard, 2009 * Accounting Versus Economic Earnings Economic earnings Sustainable cash flow that can be paid to stockholders without impairing productive capacity of the firm Accounting earnings Affected by conventions regarding the valuation of assets * Profitability Measures ROE measures profitability for contributors of equity capital. After-tax profit/book value of equity ROA measures profitability for all contributors of capital. EBIT/total assets * Past vs. Future ROE ROE is a key determinant of earnings growth. Past profitability does not guarantee future profitability. Security values are based on future profits. Expectations of future dividends determine today’s stock value. * Financial Leverage and ROE ROE can differ from ROA because of leverage. Leverage makes ROE more volatile. Let t=tax rate and r=interest rate, then: * Financial Leverage and ROE If there is no debt or ROA = r, ROE will simply equal ROA(1 - t). If ROA r, the firm earns more than it pays out to creditors and ROE increases. If ROA r, ROE will decline as a function of the debt-to-equity ratio. * Table 19.5 Impact of Financial Leverage on ROE * ROE = Net Profit Pretax Profit x Pretax Pro