Chap 3
Chap 3
Chap 3
Common-size Income
Statements
A useful way of standardizing the income statement is to express
each item as a percentage of total sales.
Ratio analysis
Computing Liquidity Ratios
TA D
Equity Multiplier = TE = 1 + E
EBIT
Times Interest Earned = Interest
Both ratios show the firm’s ability to pay back interest but
TIE is viewed as the accounting perspective while CC is
viewed as a finance perspective.
COGS
Inventory Turnover = ( Average ) Inventory
365
Days’ Sales in Inventory = Inventory Turnover
Sales
Receivables Turnover = Accounts Receivable
365
Days’ Sales in Receivables = Receivables Turnover
Assets
Capacity Intension Ratio = Sales ≠ TAT (càng lớn thì số tài sản
mua về không tạo ra nhiều lợi nhuận)
COGS
Payable Turnover = ( Average ) Accounts Payable
365
Accounts Payables Period = Payable Turnover
Net Income
Profit Margin (PM) = Sales
Net Income
Return on Assets (ROA) = ( Average ) TA (profit per dollar of assets)
Net Income Sales
= TA x Sales
= PM x TAT
Net Income
Return on Equity (ROE) = ( Average ) TE (how stockholders fared in
the year)
Net Income Sales TA
= TA
x Sales
x TA
Net Income Sales TA
= Sales
x TA
x TE
= PM x TAT x Equity Multiplier
D
= ROA x (1 + E ¿
EBITDA
EBITDA Margin = Sales
Market Capitalization (giá trị thị trường của vốn chủ sở hữu)
= Price per Share x Shares Outstanding
Enterprise Value (EV) = Market capitalization + Market value
of interest-bearing debt – Cash
EV Multiple = EV / EBITDA
Financial Model
Rosengarten has projected a 25% increase in sales for the coming
year, so we are anticipating sales of $1,000 x 1.25 = $1,250. To
generate a pro forma income statement, we assume that total
costs will continue to run at $800/1,000 = 80% of sales. With this
assumption, Rosengarten’s pro forma income statement is
created.
On our balance sheet, we assume that some items vary directly
with sales and others do not. For those items that vary with sales,
we express each as a percentage of sales for the year just
completed.
Rather than create pro forma statements, if we were so inclined,
we could calculate EFN directly as follows:
In this calculation,
Assets notice that
Sponthere
Liab are three parts. The first part
EFN = Sales x Sales - Sales x Sales – (PM x Projected
is the projected increase in assets, which is calculated using the
Sales) x (1-d)
capital intensity ratio. The second is the spontaneous increase in
liabilities. The third part is the product of profit margin and
projected sales, which is projected net income, multiplied by the
retention ratio. Thus, the third part is the projected addition to
retained earnings.
Internal Growth Rate: how much the firm can grow assets
using retained earnings as the only source of financing.
ROA x b
Internal Growth Rate: 1−ROA x b with b = 1 – d