第5节-赢利能力分析.ppt

Outline of today’s lecture Value of a firm to investors and creditors Analysis of profitability: ROA Analysis of profitability: ROCE Analysis of profitability: EPS The value of a firm to equity investors V = D1/(1+r) + D2/(1+r)2 + D3/(1+r)3 ……. The value of a firm to creditors Financial Statement Analysis 1.Understand the relation between the expected return and risk of investment alternatives, and the role of analysis in providing risk and return information. 2. Understand the usefulness of the rate of return on assets (ROA) as a measure of a firm’s operating profitability. 3. Understand the usefulness of the rate of return on common shareholders’ equity (ROCE) as a measure of profitability. 4. Understand the strengths and weaknesses of earnings per common share as a measure of profitability. What to compare? 1. The planned ratio for the period 2. The corresponding ratio from a prior period (time-series analysis) 3. The corresponding ratio for another firm in the same industry (cross-section analysis) 4. The average ratio for other firms in the same industry (cross-section analysis) Analysis of Profitability Return on assets (ROA): return to the firm as a whole Return on common equity (ROCE): return to common shareholders only Earnings per common share Analysis of Profitability Return on Assets (ROA) ROA presents profitability independent of the source of financing Does not consider leverage Measure of how well the firm uses its assets to generate income As if the firm is financed by equity alone Horrigan Corporation Horrigan Corporation-assuming no debts Horrigan Corporation ROA Average total assets of this company in year 4 (520+650)/2 = 585, Then ROA = 71.2/585 = 12.2% Why add back interest income net of income tax savings in the numerator? 1) If all equity, the firm won’t pay $16 interest expense, which increase net income by $16; 2) at 30% tax rate, government will collect an additional amount of $4.8 (16*30%) as tax, then the