Transcript Chapter 6 -- Financial Statement Analysis

Chapter 6 –
Support
Financial Statement
Analysis
6b.1
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Remember?
Common-size Analysis
An analysis of percentage
financial statements where all
balance sheet items are divided
by total assets and all income
statement items are divided by
net sales or revenues.
6b.2
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
and Remember?
Index Analyses
An analysis of percentage financial
statements where all balance sheet
or income statement figures for a
base year equal 100.0 (percent) and
subsequent financial statement
items are expressed as percentages
of their values in the base year.
6b.3
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Use Excel to Conduct a
Common-Size Analysis
First, go to
http://finance.
yahoo.com
and type in
‘GOOG’ in the
‘Get Quotes’
box to find a
company like
Google.
Source: Reproduced with permission of Yahoo! Inc. ® 2008 by Yahoo! Inc. YAHOO! and YAHOO! logo are trademarks of Yahoo! Inc.
6b.4
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Use Excel to Conduct a
Common-Size Analysis
Next, click the
‘Get Quotes’
box to access
the Google
data.
Notice on the
left side all of
the data that
Yahoo!
Provides for
users.
6b.5
Source: Reproduced with permission of Yahoo! Inc. ® 2008 by Yahoo! Inc. YAHOO! and YAHOO! logo are trademarks of Yahoo! Inc.
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Use Excel to Conduct a
Common-Size Analysis
Notice the
important
financial data?
We will click on
the ‘Income
Statement’ and
then the
‘Balance Sheet’
links to copy
and paste the
data into Excel.
Source: Reproduced with permission of Yahoo! Inc. ® 2008 by Yahoo! Inc. YAHOO! and YAHOO! logo are trademarks of Yahoo! Inc.
6b.6
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Snapshot of Google Balance
Sheet from Yahoo! Finance
Here is the
balance sheet
data.
Highlight and
copy into an
open worksheet
in Excel
Source: Reproduced with permission of Yahoo! Inc. ® 2008 by Yahoo! Inc. YAHOO! and YAHOO! logo are trademarks of Yahoo! Inc.
6b.7
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Snapshot of Google Income
Statement from Yahoo! Finance
Here is the
income
statement data.
Highlight and
copy into an
open worksheet
in Excel
Source: Reproduced with permission of Yahoo! Inc. ® 2008 by Yahoo! Inc. YAHOO! and YAHOO! logo are trademarks of Yahoo! Inc.
6b.8
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Now create the
Common-size analysis
We have tweaked some of the data cells pasted as they are not copied as ‘numbers’,
but ‘text’ formatting. The result is the ability to analyze quickly and easily.
6b.9
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Now create the
Common-size analysis
Notice we see R&D and SGA increasing faster than revenue, but it has been offset
by lower cost of revenue and taxes.
6b.10
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Now create the
Index analysis
Again, we can see that R&D and SGA are rising faster than revenue, but we also see
that other income is growing fast resulting in net income available to common
shareholders growing slightly faster than revenue.
6b.11
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
We can do the same on
the Balance Sheet!
Again, we analyze
similarly and can
see that some
longer-lived
assets are seeing
huge increases
(goodwill and
PP&E) which is
being financed by
internally
generated funds
shown via RE.
6b.12
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Ratio Analysis
• We can, of course, now utilize the
data you have in Excel to conduct
ratio analysis.
• You would likely want to also collect
industry relevant data.
• The result would allow you to do the
type of analysis discussed in the text.
6b.13
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.