Ananlysis of Financial statements.pptVIP

Analysis of Financial Statements Calculation of NOPAT NOPAT2001 = $283.8 ×(1 - 0.4) = $170.3 million NOPAT2000 = $263.0 × (1 – 0.4 ) =$157.8 million Operating Cash Flow (OCF) Operating cash flow arises from normal operations, and it is the difference between cash revenues and cash costs, including taxes on operating income. Operating cash flow differs from net cash flow because operating cash flow does not including either interest income or interest expense. OCF = NOPAT + Dep. and Amortization. EXERCISE ST-3 f. ST-3 f. EVA = EBIT(1 - T) - (Total operating capital) *(After-tax cost of capital) = $5,000,000*0.6 - ($25,000,000)*(0.10) = $3,000,000 - $2,500,000 = $500,000 REVIEW EXAM-TYPE PROBLES 1-1 EXAM-TYPE PROBLEMS 1-2 EXAM-TYPE PROBLEMS 1-3 (a.b.c.d) EXAM-TYPE PROBLES 1-1 MVA= (Shared outstanding ) (Stock price) – Total common equity $130,000,000=X* $60 -$500,000,000 X=10,500,000 shares EXAM-TYPE PROBLES 1-2 NOPAT = EBIT (1-T) =6,375,000*0.6=3,825,000 Total investor-supplied operating capital =37+5=42 million EVA = 3,825,000-42,000,000*8.5% =255,000 EXAM-TYPE PROBLEMS 1-3 a. NOPAT = EBIT* (1-t) = $ 150 *0.6 = $90 b. NOWC02 =CA - CL = $ 372- $ 108- $ 72= $ 192 NOWC01 = $ 360 - $90 - $60= $ 210 c. OC01 =NOWC + FA = $ 360 - 150 +250 = $ 460 OC02 = $ 372 - $ 180 + $ 300= $ 492 d. FCF =NOPAT – Net investment in operating capital = $ 90 – ($ 492 - $ 460 )=$58 Ratio Analysis Financial ratios are designed to help one evaluate a financial statement. Ratios standardize numbers and facilitate comparisons. Liquidity ratios Asset management ratios Debt management ratios Profitability ratios Market value ratios Liquidity Ratios A liquid asset is one that trades in an active market and hence can be quickly converted to cash at the going market price. T