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Unidade 11Interpretação de documentos financeiros

Copyright © Prentice Hall Inc. 2000. Author: Nick Bagley, bdellaSoft, Inc.

ObjectivosContrastar modelos contabilísticos e económicos

<=>Valor contabilístico

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Financial Statements Provide: current and historical information to owners and

creditors a convenient way for owners and creditors to set

performance targets a convenient standard template for financial

planning

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3.1 Functions of Financial Statements Financial Statements:

Provide information to the owners & creditors of a firm about the current status and past performance

Provide a convenient way for owners & creditors to set performance targets & to impose restrictions of the managers of the firm

Provide a convenient templates for financial planning

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The Balance Sheet

Summarizes a firms assets, liabilities, and owner’s equity at a moment in time

Amounts measured at historical values and historical exchange rates

Prepared according to GAAP, Generally Accepted Accounting Principles GAAP modified occasionally by the Financial Accounting

Standards Board Exchange-listed companies must comply with Securities

and Exchange Commission (SEC) rules

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The Balance Sheet

Major Divisions: Assets

Current assets (less than a year) Long-term assets (longer than a year

Depreciation

Liabilities and Stockholder’s Equity Liabilities

Current Liabilities Long-term debt

Equity

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GPC Balance Sheet at Dec 31, 2xx1

2xx0 2xx1 ChangeAssetsCash & mkt'ble secs 100.0 120.0 20.0 Receivables 50.0 60.0 10.0 Inventories 150.0 180.0 30.0 *Current assets 300.0 360.0 60.0

Pp&e 400.0 490.0 90.0 Acc depreciation (100.0) (130.0) (30.0) *Net pp&e 300.0 360.0 60.0

**Total Assets 600.0 720.0 120.0

Liabilities & EquityAccounts payable 60.0 72.0 12.0 Short-term debt 90.0 184.6 94.6 *Current liabilities 150.0 256.6 106.6

Long-term debt 150.0 150.0 - **Total liabilities 300.0 406.6 106.6

Paid-in capital 200.0 200.0 - Retained earnings 100.0 113.4 13.4 *Shareholders equ 300.0 313.4 13.4

Liab + Shareholder 600.0 720.0 120.0

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The Income Statement

Summarizes the profitability of a company during a time period

Major Divisions: Revenue & cost of goods sold

Gross margin

General administrative and selling expenses (GS&A) Operating income

Debt service Taxable income

Corporate Taxes Net income

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The Income Statement

Important Reminders: Retained earnings are not added to the cash

balance in the balance sheet, but are added to shareholder’s equity

Accounts show historical values, not market values.

The shareholder’s equity may be much higher or lower than the market value of the firm.

The value of the firm’s land may have halved or doubled, but this would not be reported in the balance sheet

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GPC Income Statement for Year Ending 2xx1

Sales revenues 200.0 Cost of goods sold (110.0) *Gross margin 90.0

Gen sell, & admin exp (30.0) *Operating income 60.0

Interest expense (21.0) *Taxable income 39.0

Income tax (15.6) *Net income 23.4

Allocation to divs (10.0) *Chg retained earn 13.4

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The Cash-Flow Statement

Show the cash that flowed into and from a firm in during a time period Focuses attention on a firm’s cash situation

A firm may be profitable and short of cash Unlike the balance sheet and income

statement, cash flow statements are independent of accounting methods

The IRS uses accounting income to compute tax, so accounting rules have a second order effect on cash flows through taxes

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GPC Cash Flow Statement, forthe Year ending Dec 31, 2xx0

Net income 23.4 + Depreciation 30.0 - Increase in acc rec (10.0) - Increase in invent (30.0) + Increase in acc rec 12.0 *Total cash from operations 25.4

- Invest in new ppe (90.0) *Cash flow invest' activities (90.0)

-Div paid (10.0) + Inc short-term debt 94.6 *Cash flow from financing 84.6

**Chng cash & mkt securities 20.0

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GPC Balance Sheet at Dec 31, 2xx1

2xx0 2xx1 ChangeAssetsCash & mkt'ble secs 100.0 120.0 20.0 Receivables 50.0 60.0 10.0 Inventories 150.0 180.0 30.0 *Current assets 300.0 360.0 60.0

Pp&e 400.0 490.0 90.0 Acc depreciation (100.0) (130.0) (30.0) *Net pp&e 300.0 360.0 60.0

**Total Assets 600.0 720.0 120.0

Liabilities & EquityAccounts payable 60.0 72.0 12.0 Short-term debt 90.0 184.6 94.6 *Current liabilities 150.0 256.6 106.6

Long-term debt 150.0 150.0 - **Total liabilities 300.0 406.6 106.6

Paid-in capital 200.0 200.0 - Retained earnings 100.0 113.4 13.4 *Shareholders equ 300.0 313.4 13.4

Liab + Shareholder 600.0 720.0 120.0

GPC Income Statement for Year Ending 2xx1

Sales revenues 200.0 Cost of goods sold (110.0) *Gross margin 90.0

Gen sell, & admin exp (30.0) *Operating income 60.0

Interest expense (21.0) *Taxable income 39.0

Income tax (15.6) *Net income 23.4

Allocation to divs (10.0) *Chg retained earn 13.4

GPC Cash Flow Statement, forthe Year ending Dec 31, 2xx0

Net income 23.4 + Depreciation 30.0 - Increase in acc rec (10.0) - Increase in invent (30.0) + Increase in acc pay 12.0 *Total cash from operations 25.4

- Invest in new ppe (90.0) *Cash flow invest' activities (90.0)

-Div paid (10.0) + Inc short-term debt 94.6 *Cash flow from financing 84.6

**Chng cash & mkt securities 20.0

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3.4 Returns to Shareholders v. Return on Equity

Recall our definition in Chapter 2 of the holding period return, and compare this with the economic measure of income

4.1200$

8.2$

Re

MillionMillion

StartPricecomeEconomicIn

StartPricendsCashDivideStartPriceEndPrice

turn

• This is the Total Shareholder Return

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Returns to Shareholders v. Return on Equity (Continued) Traditionally, corporate performance has

been measured by Return on Equity, ROE

%8.7300$

4.23$

Million

Million

rsEquityShareHolde

NetIncome

rsEquityShareHolde

IncomeAccountingROE

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Profitability

%6.72/4.313300

4.23

sEquityr'StockHolde

NetIncome (RoE)Equity on Return

%1.92/720600

60

alAssetsAverageTot

EBIT (RoA) Assetson Return

%30200

60Sales

EBIT (RoS) Saleson Return

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Asset Turnover

Times 3.02/720600

200

Assets Total Average

Sales Turnover Asset

Times 7.02/180150

110

Inventory Average

Sold Goods ofCost Turnover Inventory

Times 6.32/6050

200

sReceivable Average

Sales Turnover sReceivable

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Financial Leverage

Times 9.221

60

ExpenseInterest

EBIT Earnt Interest Times

%57720

6.406Assets Total

Debt Total Debt

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Liquidity

Times 7.06.256

180sLiabilitieCurrent

sReceivableCash Earnt Interest Times

Times 4.16.256

360sLiabilitieCurrent

AssetsCurrent Current

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Market Value

6.04.313

20.187

Shareper ValueBook

Shareper Price Book Market to

0.84.23

2.187

Shareper Earnings

SharePer Price Earnings toPrice

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Ratio Comparisons

Establish Your Perspective Shareholder employee, Management, or Union Creditor Predator, Customer, Supplier, Competitor, Trade Association

Benchmarks Other companies ratios The firm’s historical ratios Data extracted from financial markets

Sources Dun & Bradstreet, Robert Morris, Commerce Department's

Quarterly Financial Report, Trade Associations

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Relationships Amongst Ratios

It is sometimes valuable to decompose ratios into sums, differences, products and quotients of other ratios. Many such schemes start with:

TurnoverAsset * saleson Return

*

Assets

Sales

Sales

EBIT

Assets

EBITRoA

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Illustration

Consider two firms that are identical except that Nodebt is financed using $1,000,000 of equity and Halfdebt is financed using $500,000 of equity and $500,000 of debt

further assume that the EBIT of both firms is $120,000 and tax is 40%

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Case: Borrow at 10%

Nodebt HalfdebtEBIT 120,000 120,000Interest 0 50,000Taxable Income 120,000 70,000Tax 48,000 28,000Net Income 72,000 42,000Equity 1,000,000 500,000ROE 7.20% 8.40%

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Case: Borrow at 15%

Nodebt HalfdebtEBIT 120,000 120,000Interest 0 75,000Taxable Income 120,000 45,000Tax 48,000 18,000Net Income 72,000 27,000Equity 1,000,000 500,000ROE 7.20% 5.40%

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Case: Borrow at 10%: Effect of Business Cycle on ROE

Economic ROA ROE ROEConditions Nodebt Halfdebt Bad Year 1% 0.6% -4.8% Normal Year 12% 7.2% 8.4% Good Year 30% 18.0% 30.0%

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GPC Financial Statements, Years xxx1 - xxx3 (Nearest $ Million) (Percent of Year's Sales)

Year xxx0 xxx1 xxx2 xxx3 xxx1 xxx2 xxx3

Income StatementSales 200 240 288 100.0% 100.0% 100.0%Cost of goods sold 110 132 158 55.0% 55.0% 55.0%Gross margin 90 108 130 45.0% 45.0% 45.0%Selling, general & admin. expenses 30 36 43 15.0% 15.0% 15.0%EBIT 60 72 86 30.0% 30.0% 30.0%Interest expences 30 45 64 15.0% 18.8% 22.2%Taxes 12 11 9 6.0% 4.5% 3.1%Net income 18 16 13 9.0% 6.7% 4.7%Dividends 5 5 4 2.7% 2.0% 1.4%Change in shareholder's equity 13 11 9 6.3% 4.7% 3.3%

Balance SheetAssets: Cash & equivalents 10 12 14 17 6.0% 6.0% 6.0% Receivables 40 48 58 69 24.0% 24.0% 24.0% Inventories 50 60 72 86 30.0% 30.0% 30.0% Property, Plant & equipment 500 600 720 864 300.0% 300.0% 300.0% Total Assets 600 720 864 1037 360.0% 360.0% 360.0%Liabilities: Payables 30 36 43 52 18.0% 18.0% 18.0% Short-term debt 120 221 347 502 110.7% 144.6% 174.2% Long-term debt 150 150 150 150 75.0% 62.5% 52.1% Total Liabilities 300 407 540 704 203.7% 225.1% 244.3%Shareholder's equity 300 313 324 333 156.3% 134.9% 115.7%

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(Nearest $ Million) Year xxx0 xxx1 xxx2 xxx3

Income StatementSales 200 240 288Cost of goods sold 110 132 158Gross margin 90 108 130Selling, general & admin. expenses 30 36 43EBIT 60 72 86Interest expences 30 45 64Taxes 12 11 9Net income 18 16 13Dividends 5 5 4Change in shareholder's equity 13 11 9

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Balance SheetAssets: Cash & equivalents 10 12 14 17 Receivables 40 48 58 69 Inventories 50 60 72 86 Property, Plant & equipment 500 600 720 864 Total Assets 600 720 864 1037Liabilities: Payables 30 36 43 52 Short-term debt 120 221 347 502 Long-term debt 150 150 150 150 Total Liabilities 300 407 540 704Shareholder's equity 300 313 324 333

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(Percent of Year's Sales)Year xxx1 xxx2 xxx3

Income StatementSales 100.0% 100.0% 100.0%Cost of goods sold 55.0% 55.0% 55.0%Gross margin 45.0% 45.0% 45.0%Selling, general & admin. expenses15.0% 15.0% 15.0%EBIT 30.0% 30.0% 30.0%Interest expences 15.0% 18.8% 22.2%Taxes 6.0% 4.5% 3.1%Net income 9.0% 6.7% 4.7%Dividends 2.7% 2.0% 1.4%Change in shareholder's equity6.3% 4.7% 3.3%

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Balance SheetAssets: Cash & equivalents 6.0% 6.0% 6.0% Receivables 24.0% 24.0% 24.0% Inventories 30.0% 30.0% 30.0% Property, Plant & equipment 300.0% 300.0% 300.0% Total Assets 360.0% 360.0% 360.0%Liabilities: Payables 18.0% 18.0% 18.0% Short-term debt 110.7% 144.6% 174.2% Long-term debt 75.0% 62.5% 52.1% Total Liabilities 203.7% 225.1% 244.3%Shareholder's equity 156.3% 134.9% 115.7%

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GPC Financial Statements, Years xxx1 - xxx3 (Nearest $ Million) (Percent of Year's Sales)

Year xxx0 xxx1 xxx2 xxx3 xxx1 xxx2 xxx3 F(sales)? xxx4

Income StatementSales 200 240 288 100.0% 100.0% 100.0% N/A 346Cost of goods sold 110 132 158 55.0% 55.0% 55.0% Yes 190Gross margin 90 108 130 45.0% 45.0% 45.0% N/A(Yes) 156Selling, general & admin. expenses 30 36 43 15.0% 15.0% 15.0% Yes 52EBIT 60 72 86 30.0% 30.0% 30.0% N/A 104Interest expences 30 45 64 15.0% 18.8% 22.2% No 87Taxes 12 11 9 6.0% 4.5% 3.1% N/A 7Net income 18 16 13 9.0% 6.7% 4.7% N/A 10Dividends 5 5 4 2.7% 2.0% 1.4% N/A 3Change in shareholder's equity 13 11 9 6.3% 4.7% 3.3% 7

Balance SheetAssets: Cash & equivalents 10 12 14 17 6.0% 6.0% 6.0% Yes 21 Receivables 40 48 58 69 24.0% 24.0% 24.0% Yes 83 Inventories 50 60 72 86 30.0% 30.0% 30.0% Yes 104 Property, Plant & equipment 500 600 720 864 300.0% 300.0% 300.0% Yes 1037 Total Assets 600 720 864 1037 360.0% 360.0% 360.0% N/A(Yes) 1244Liabilities: Payables 30 36 43 52 18.0% 18.0% 18.0% Yes 62 Short-term debt 120 221 347 502 110.7% 144.6% 174.2% No Long-term debt 150 150 150 150 75.0% 62.5% 52.1% No Total Liabilities 300 407 540 704 203.7% 225.1% 244.3% N/A 904Shareholder's equity 300 313 324 333 156.3% 134.9% 115.7% N/A 340

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GPC Financial Statements, Years xxx1 - xxx3 (Nearest $ Million)

Year xxx0 xxx1 xxx2 xxx3 xxx4

Income StatementSales 200 240 288 346Cost of goods sold 110 132 158 190Gross margin 90 108 130 156Selling, general & admin. expenses 30 36 43 52EBIT 60 72 86 104Interest expences 30 45 64 87Taxes 12 11 9 7Net income 18 16 13 10Dividends 5 5 4 3Change in shareholder's equity 13 11 9 7

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GPC Financial Statements, Years xxx1 - xxx3 (Nearest $ Million)

Year xxx0 xxx1 xxx2 xxx3 xxx4

Balance SheetAssets: Cash & equivalents 10 12 14 17 21 Receivables 40 48 58 69 83 Inventories 50 60 72 86 104 Property, Plant & equipment 500 600 720 864 1037 Total Assets 600 720 864 1037 1244Liabilities: Payables 30 36 43 52 62 Short-term debt 120 221 347 502 692 Long-term debt 150 150 150 150 150 Total Liabilities 300 407 540 704 904Shareholder's equity 300 313 324 333 340

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External Funds Needed

%58.31

)30.01(*)40.01(*40.8684.5180.1036

)30.01(*)40.01(*)26.8740.86(300

)1)(1(][][

)1)(1)((

Million 0956.190$

)30.01(*)40.01(*)26.872.1*40.86((2.0*)84.5180.1036(

)1)(1)(((])[][(0

10

0

01

dtEBITSLSA

dtIntEBITEFAgrowth

dtIntS

SEBIT

S

SSSLSAEFN

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External Funds Needed for Growth

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Growth Rate

Ext

ern

al F

un

ds

Nee

ded

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Observation:

Sometimes the new assets required to generate income are not a high as in this example, and the company may able to support a level of growth with no external funding (-0.00038 in our case)

)1)(1(][][

)1)(1)((EF No dtEBITSLSA

dtIntEBITgrowth